CLEAN AIR ACT
COMPLIANCE!
ENFORCEMENT POLICY
COMPENDIUM
1996
Volume 5
H-i -J-16

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SECTION H
H
ACID RAIN (TITLE IV)

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SECTION H DOCUMENT 1
Use of Acid Rain CEMS as NSPS CEMS
xxix x193
‘1

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tOS!4
F UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
_____ WASHINGTON, D.C. 20460
4 )
4( pqQlI.
OFflCEOF
AIR AND RADIATION
MENORA iD iM
SUBJECT: Use of Acid Rain CEMS as NSPS CEMS
FROM: John B. Rasnic, Directo ....
Stationary Source Compliance Division
Office of Air Quality Planning and Standards
TO: Air, Pesticides, and Toxics Management Division
Directors
Regions I arid IV
Air and Waste Management Division Director
Region II
Air, Radiation, and Toxics Division Director
Region III
Air and Radiation Division Director
Region V
Air, Pesticides, and Toxics Division Director
Region VI
Air and Toxics Division Directors
Regions VII, VIII, IX, and X
The Stationary Source Compliance Division (SSCD) has
recently received a number of questions pertaining to using 40
CFR Part 75 (Acid Rain) continuous emission monitoring systems
(CEXSS) to meet the SO, and NO CEMS requirements of New Source
Performance Standards TNSPS), f 0 CFR Part 60, Subparts D, Da, and
Db. In the near future, electric utilities operating CEXSs to
comply with the requirements of Part 60 must also install CEMSs
to meet the requirements of Part 75. These utili’ ies wish to use
the same CEMSs to comply with both Acid Rain and NSPS programs.
Representatives from the Regions, States, and regulated community
requested a clarification on whether the Acid Rain CEMSa can be
used as the NSPS CEMSs, and if during the replacement period of
the existing NSPS CEMSs by the Acid Rain CEMSs, NSPS monitoring
and reporting could be curtailed.
Pnnted on Recycled Paper

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SSCD realizes that the requirements of Part 75 directly
affect CENS performance, data collection, and reporting for the
purposes of Part 60, and that there may be a conflict when the
NSPS CEMSS are replaced by Acid Rain CENSs. The possibility of
this Conflict has also been identified in the Acid Rain CE1’ S
Implementation Team Approach paper.
SSC!D ha det,rmin d that 51fl ’ P the CEMS requirements of 40
CFR Part 75 are equivalent to or more stringent than the
requirements of 40 CFR Part 60, EPA can accept Acid Rain CEMSs as
N SPS CEMSs provided that the utility demonstrates compliance with
all applicable NSPS regulations. However, while authorizing the
use of Acid Rain CEMSS as NSPS CEMSs, we determined that a
blanket “grace period” from complying with the requirements of
Part 60 when installing CEMSS for Part 75 is not an appro.priate
option.
SSCD recommends that, whenever possible, a utility operate
the e cjstjng NSPS CE? SS until the new Part 75 CEMSe are
operational and certified according to the requirements of Parts -
60 and 75 (except for the DkHS certification). The field test of
the Part 75 certification process should be scheduled as soon as
possible after the CEMSs become operational. If t iere is an
unavoidable changeover time, the utility must minimize that time
since all periods of missing data will count as monitor downtime
for NSPS reporting purposes.
SSCD also recommends that, to meet the monitor data
availability during a changeover time, a utility use an approach
consistent with the requirements of Part 60. To collect data for
SO, and NO from Subpart Da and Db boilers, a utility shall use
methods, procedures, and alternatives specified in Part
60.47a(h),(j), Part 60.47b(b), and in Part 60.48b(f). The
utility must notify EPA when using this approach. The Regions,
at their discretion, may require additional monitoring
procedures. To meet the monitoring requirements when a Subpart 0
boiler is involved, a utility should apply to the Region for a
short-term alternative to operating CEMS consistent with the
applicable requirements of 40 CFR Part 60. The EPA Regional
Offices may allow using the requested alternative to operating
CEMS that meets the general criteria of this memorandum. Every
petition for an approval of a temporary alternative to operating
CEMS should:
• Justify the request.
• Present the alternative.
• Present the approach to monitoring compliance with the
NSPS emission limitations.
• Provide a monitoring schedule.

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Examples of acceptable temporary alternatives to operating CENS
include instrumental, analytical, and parametric approaches;
e.g., fuel sampling and analysis, periodic stack testing using a
reference method, control device parametric monitoring, visible
emission observation, or a backup monitor. These alternatives
must be capable of clearly indicating compliance with applicable
regulations.
I the utility—proposed alternative to operating CEMS does
not meet the above listed conditions, the request must be denied.
The use of any alternative must be short-term, not to exceed
eight weeks. The Regions may grant an extension of this term
only in extreme fully justifiable circumstances. We also suggest
that the Regions take a similar approach to other federally-
mandated programs that require SO 2 /NOx CEMSS; e.g., SIPS.
The Regions will approve in writing a successfully completed
field test of the acid rain CEXS certification procedure as an
equivalent to NSPS CEMS certification if a utility can
demonstrate compliance with the NSPS relative accuracy
requirements (by using data from Part 75 relative accuracy test,
diluent CEMS, and reference method) and the 7—day calibration
drift test (may involve a recalculation of the drift results as a
percentage of the NSPS span value rather than the Part 75 value).
If you have any questions, please call Zofia Kosia of my
staff at 703—308—8733.
cc: John Seitz
Larry Kertcher, AP.D

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SECTION H DOCUMENT 2
Acid Rain Compliance/Enforcement Guidance
06/27/94
2

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sr4
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
_____ WASHINGTON. D.C. 20460

JUN 27 ;994
MEMORANDUM
SUBJECT: Acid Rain Compliance/Enforcement Guidance
FROM: John B. Rasnic.,. Director
Manufacturing, Energy, an(Transportation Division
Office of Compliance
Kathie A. Stein, Director .eC 4—/.
Air Enforcement Division
Of. ice of Regulatory Enforcement
TO: Air, Pesticides, and Toxics Management Division
Directors
Regions I and IV
Air and Waste Management Division Director
Region II
Air, Radiation, and Toxics Division Director
Region III
Air and Radiation Division Director
Region V
Air, Pesticides, and Toxics Division Director
Region VI
Air and Toxics Division Directors
Regions VII, VIII, IX, and X
The Stationary Source Compliance Division (SSCD) and the Air
Enforcement Division (AED) have developed the Acid Rain Compliance
and Enforcement Guidance document (Attachment 1). This document
was developed with input from the Acid Rain Division (ARD) and the
Regions. The purpose of the guidance is to assure national
consistency in enforcing the acid rain program by identifying
functions and roles in the enforcement process and recommending
minimum enforcement actions to be taken for specific violations.
The guidance should be used along with the Agency penalty policy
and the Acid Rain Addendum to the February 7, 1992, Timely and
Appropriate Enforcement Response to Significant Air Pollution
Violators (SVT&A Guidance) in addressing violators of the Acid
Rain Regulations. The addendum is included as Attachment 2.
.d(R.cyc abI.
W Soy Canoia Wik or p r V .t
com i g 4s 50% i.cyUI fl sr

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In addition, a compliance and enforcement workgroup has been
formed to coordinate enforcement approaches on a case-by-case
basis as violations occur. Monthly conference calls are held to
discuss the compliance status of Phase I sources and the -
appropriate enforcement response(s) for any violations.
We hope that these efforts will help in facilitating the
successful implementation of the acid rain rules and focus the
compliance and enforcement resources where they will provide the
best results.
Attachments
cc: Regional Counsels
Acid Rain Enforcement Work Group Members

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ATTACHMENT 3.
ACID RAIN COMPLIANCE/ENFORCEMENT GUIDANCE

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ACID RAIN
COMPt IANC /ENFORCZMENT
G ID ANC E
This document is intended solely for the guidance of
government personnel. It is not intended and cannot be relied upon
to create rights, substantive or procedural, enforceable by any
part in litigation with the United States. The Agency reserves the
right to act at variance with this guidance and change it at any
time without public notice.

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ACID RAIN CO .1PLIANCZ/ENF0RCEMENT GUIDANCE
: NflODtL T O
Title IV of the Clean Air Act Amendments (the Act) of 1-990
requires that the United states reduce emissions of sulfur
dicx de and nitrogen oxides (NO 1 ) from utility boilers by 10
ms1L on and 2 million cons respectively. The acid rain rules
implementing the major requirements of Title IV were promulgated
on January 11, 1993 and include the permit 1 monitoring and.
allowance regulations required by the Act. Implementation of the
acid rain regulations is a two-phase program involving multiple
deadlines depending on the phase and. related rules.
The implementation: and enforcement process is a joint
effort of the Office of Enforcement and Compliance Assurance
(OECA), the Acid Rain Division (M D) of the Of f ice of ‘Atmospheric
Programs , EPA Regional Of f ices (Regions), ,and state environmental
agencies (States). To maintain the acid rain program ’s
integrit all enforcing parties are expected to take a very
aggresai’4 approach to implementing and enforcing this program.
Any violations of the acid rain program must be addressed along
with all known violations of other air programs. In addition,
since many of the potential acid rain violators are major
sources, the violations may qualify as Significant Violations.
This guidance document addresses enforcement requirements
for the Excess Emissions rule, Continuous Emissions Monitoring
Systems (C 4S) rule, and Permit rule. This guidance document
will be amended in the future to add the enforcement requirements
for the NO n ile . This guidance document outlines
responsibilities for enforcement actions and provides recommended
enforcement responses (Appendix 1 for the Excess Emissions rule,
Appendix 2 for the 045 rule, Appendix 3 for the Permit rule, and
AppendiX 4 reserved f or the NO 1 rule) for the specified
violations. This guidance document should be used in conjunction
with the Acid Rain Addendum to the February 7, 1992 guidance on
Timely and Appropriate Enforcement Response tO significant Air
Pollution violators (SV/T&A Guidance) and the Agency penalty
policy (Appendix 5 presents an index of EPA penalty/enforcement
response guidances) to identify and address violations.
Although this guidance generally identifies most of the
possible acid. rain regulation violations, it does not necessarily
identify an non-compliance situdtions. When the Regions or ARC
encounter situations that may be violations of the rules but are
not specifically addressed in this guidance document and cannot
be addressed using Regional discretion, they should bring these
cases to the attention of OECA. The Regional Offices and OECA
will be involved in the resolution of these cases. The
recommended enforcement response for these cases will be
described and added to this guidance document as part of

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Appendix 6, SUppleme a1 Enforcement ACtions.
:spCNSThtLITIES OF PARTIES
The Office of Enforcement and Compliance Assurance is
responsible for determining compliance with accounting and
reporting provisions of the Excess Emissions and CEMS rules.
The AED will take the lead on enforcement actions involving
provisions as indicated in Appendices 1., 2, and 4, and will
coordinate enforcement responses against multi-Regional
violators. OECA will also provide guidance and assistance to the
Regions on enforcement-related issues, coordinate enforcement
actions with ARD and he Regions, provide legal and technical
support, help prepare legal packages, and coordinate enforcement
actions with the DOJ, when applicable. The OECA will review
copies Eof all administrative penalty orders and the
administrative consent agreements filed by the Regions. The OECA
will initi ate a coordinated enforcement response action against a
utility w h violations at power plants located in different
Regions. The OECA will work closely with the Regions and ARD on
these actions. -
The OECA. will prepare materials for filing or for referral
to DOJ. The OECA will coordinate with the Regions, ARD, and DOJ
on all civil judicial referrals. For Headquarters-led
Administrative Penalty Orders (APOs) and civil judicial
referrals, OECA attorneys will fulfill the role of the Agency’s
attorneys, preparing materials for filing or for referral to DOJ.
The OECA ’s Criminal Investigation Division will investigate the
Headquarters-led criminal cases.
The Acid Rain Division is responsible for certain aspects of
program implementation, particularly for administering the
accountii g provisions of the rules, issuing permits, and
participating in oversight of certain reporting procedures. ARD
will, in cooperation with OE , generally identify potential
violations related to reporting requirements, allowance accounts,
and allowable emission rates. Within 30 days of identifying
potential violations, ARD will notify the Regions and OECA and
provide all, documentation on these violations. ARD will also
prepare and provide to OECA and each applicable Region a summary
of the units’ Allowance Tracking System CATS) account status no
later than 90 days after the end of any calendar year. In
addition, within 90 days after the end of a calendar year ARD
will provide OEcA with a list of utilities that exclusively rely
on SO 2 allowances as a compliance method so this information can
be used as a targeting tool to help assess compliance with other
regulations.
The EPA R.gional Of fic.. are responsible for determining
compliance with the program (except for the accounting and

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reoorting provisions of the Excess Emissions and CEMS rules) and
providing information on the violators ‘to QECA. The Regions will
:a e he lead on enforcement actions for violations as indicated
in AppendiCes 1-4, except where nationally-coordinated -
enforcement responses are appropriate against multi-Regional
v olatcrs, in which case headquarters would have the lead. tJpon
receipt of permit applications, monitoring plans, notifications
of CEMS certifications, CEMS certification reports, and any
information (from field inspectors) on violations of.CEMS
operation, maintenance, and calibration, the Regions will
identify violations and violators. All violations must be
appropriately addressed.
In addition, in Phase II, the Regions may consult EPA
Headquarters if needed or when an approach to a particular
situation has not been developed in Phase I arid listed in
Appendix S (Supplemental Enforcement Actions). In addition, the
Regions wi),l use all information provided by ARD on the status of
the ATS ac ount to identify violators and initiate enforcement
actions. he Regions will notify AED about these actions.
The Regions will submit copies of all administrative penalty
orders, all signed consent agreements and penalty justification
documentation to the Air Enforcement Division (AED) of OECA
within 20 days of filing or entry to ensure a proper coordination
of the program’s enforcement. The Regions will refer civil
judicial actions to DOJ with copies to AED fgr review and
approval.
The Regions must assure that the regulated utilities are in
compliance with other relevant regulatory air programs and take
enforcement actions on all known violations of these programs
concurrently with enforcement responses against the acid rain
rule violations. In addition, the Regions will enter all
Significant Violators (and the subsequent enforcement actions)
into the Aerometric Information and Retrieval System (AIRS)
following the SV/T&A Guidance. AIRS will be used as a tracking
system for violations and enforcement responses. Acid rain
violations and enforcement responses should be entered into the
system using the acid rain air program code.
Th. Stats enviror mental agencies will actively assist the
Regions in any enforcement actions in Phase I and Phase II. In
Phase II, the Regions, at their discretion, may defer some
enforcement actions to the States if the States propose adequate
enforcement response plans.
All parties involved in the implementation, compliance, and
enforcement processes will direct inquiries about coordinating
acid rain compliance and enforcement requirements with the
requirements of the NSPS and SIP programs to OECA.

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COMPLJANCE AND ENFoRcEM ’r RE5?O SES
The Act Provides EPA and its delegatees broad authority to
uncover violations, return violator to compliance, and assess
penalties for vioLations. Section 114 of the Act delineates the
Agency’s authority to collect compliance information. The
Agency ’s authority to compel compliance and to assess penalties
is set forth in Section 113. While Section 120 of . the Act
authorizes the assessment of noncompliance penalties equal to the
economic benefit of noncompliance, this authority provides less
flexibility than Section 113 remedies that confer the same
benefits. For this reason, Section 120 has not seen frequent
use. Various compliance and enforcement response options
available to the enforcing agency (i.e. States, EPA Regions, or
EPA Headquarters) are discussed below. Because selection of the
appropriate enforcement response option depends on the
circumstances surrounding a particular event, this guidance
describes he advantages and limitations of each form of
response. ‘
The response options are presented here in order of
ascending stringency. The enforcing agency should select a
sanction commensurate to the seriousness or number of the
violations and the recalcitrance of the violator. Please note
that selection of one enforcement response does not foreclose the
enforcing agency’s ability to initiate another response using a
different enforcement authority. Reliance on this guidance
should not replace existing case screening procedures.
Addressing Potential Violations
Because determinations of compliance with the acid rain
requirements will likely be founded on pervasive self-reporting
representative of the unit’s compliance status, reported data
indicating a violation will almost always be sufficient by itself
to support a finding of violation. On those rare occasions when
the overseeing agency decides that additional monitoring or
analysis is required to determine or confirm the violation,
Section 114 of the Act permits collection of any relevant
information that an be used to determine whether a person is in
violation of any provision of the Act. Overseeing agencies
should be mindful of the necessity of notifying sources of
violatione at the earliest appropriate date.
Notification of discovered violations should not be delayed
while the agency investigates other potential violations (see
discusgjo below). The following three information gathering
techniques are perhaps most useful.
Information R.qu.st
When the overseeing agency can precisely delineate the

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fcrrnatLOfl it needs o c rn 1ete its c znc1iance determination, it
sr .ould send the suspected violator a “Section 114 Letter” (or
Stace equivalent) requiring the recipient to supply that
infcr’taciofl by a specified deadline. In such circumstances,
surgical. use of potentially very broad Section 114 authority
recovers the necessary information quickly and without placing
undue burden cn either the enforcing agency or the regulated
entity. A source’s failure to provide the requested information
constitutes a separate enforceable violation.
Site Inspection
Site inspections outside the normal inspection cycle should
be conducted when the overseeing agency cannot rely on
information submitted in response to a Section 114 letter to
complete its compliance determination. Circumstances in which a
site inspection might be appropriate include required stack tests
or agency review of records kept on site that are too voluminous
for the so rce reasonably to copy and submit.
Administrative Subpoena
Section 307(a) of the Act allows EPA to issue an
administrative subpoena requiring a person to appear, with
documents as needed, and give testimony under oath. The purpose
of the administrative subpoena is to gather any information and
documents related to the Act that EPA wishes to receive from a
person. The Agency need not have evidence of a violation
or have commenced an administrative proceeding before it uses
this investigatory tool. Administrative subpoenas are similar to
those issued by courts, but are issued by EPA under its own
authority. The administrative subpoena power could be very
useful in the acid rain program to get testimony and documents
from designated representatives. Administrative subpoenas should
only be used prior to the filing of a judicial complaint; after
that time, a deposition is the proper vehicle for obtaining
testimony prior to trial. EPA must pay subpoenaed persons the
same fees for time arid mileage that the federal court would pay
in those circumstances. If a person fails to appear for an
administrative subpoena, the federal district court can,
following application by the Tjnited States, issue its own
subpoena to the person or hold that person in contempt.
Addressiri Violations
Once the overseeing agency determines that a violation
occurred, it should send notice of its findings to the violator.
From that point forward, the enforcing agency has two goals: to
return the violator to compliance; and to recover a penalty that
removes the violator’s economic benefit of noncompliance and
serves as a credible deterrent to future violations. The Act
provides a number of options for each step of thi.s process.

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Finding of Violation
There are several reasons why the overseeing agency shøuld
oti:y the source of a unit’s violations. First, Section 113(a)
of the Act requires that the Administrator or his/her delegatee
noti y a source that it has been found in violation of a SIP or
pernu.t requirement at least 30 days before initiating an
enforcement action in either the adrnj.ru.strative or a judicial
forum. The SV/T&A Guidance dictates that SIP and NSPS violations
by major sources must be addressed by either a Notice of
Violation (SIP violations) or a Finding of Violation (non-SIP
violations) by day 45. For the purpose of the non-permit acid.-
rain program violations, the use of an FOV is appropriate.
Notifying the source of its violations also shifts the
burden of proof for penalty purposes, allowing EPA to assert that
the source’s violations continue until the source can demonstrate
that it h s achieved compliance. In addition, notifying the
source ma alert it to the violations of which it was unaware and
allow the source to initiate compliance efforts at the earliest
possible date.
Whenever a violation is plain on the face of a source’s
report (i . e. required data is missing),, the enforcing agency
should issue the FOV. Additional info rmation relating to other
potential violations can be requested under Section 114 authority
as part of the FOV. Issuance of the FOV is a recommended
incremental step prerequisite to an adequate enforcement
response, and should not be considered the goal of the Agency’s
enforcement process. Following the issuance of the FOV, the
enforcement process should proceed unless information gathered
after the issuance of the FOV indicates either that the Agency
lacks sufficient evidence of violation to support further action
or that no further action is warranted.
Field Citation
Section 113(d) (3) of the Act gives EPA authority to issue
field citations (PC) assessing penalties not to exceed $5,000 per
violation per day. While regulations and guidance implementing
this authority are not yet in place, field citations will most
likely be used to address minor violations that are few in number
and which can be easily detected, readily proved, and simply
corrected. Where a source has numerous minor violations or a -
prior history of similar violations suggesting careless disregard
for the regulations, the Agency should rely on the more stringent
enforcement remedies discussed below.
A 4 4 istrativ. Cosiplianc. Order
Section 113(a) authorizes the overseeing agency to order a
violator to return to compliance as expeditiously as possible,

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but in no event longer than one year after the date the order was
issued. Such orders should always specify the date by which
ccrrpliance must be achieved and should, where applicable, include
verifiaole interim milestones. A source’s failure to comply ciith
an administrative compliance order (ACO) is a separate
en:orceable violation. Issuance of an ACO is appropriate where
the actions necessary to achieve compliance are straightforward,
clearly can be completed in less than one year, and the agency
believes that the source will perform the required actions. An
important limitation of the administrative compliance order is
that it cannot assess a penalty.
Administrative Penalty Ord.r
Administrative penalty orders (APO’s) under Section 113(d)
are the flip side of ACO’s. By means of an APO, the overseeing
agency can assess a penalty, but cannot order compl iance.
Because APO’s and ACO’s complement one another, they are often
issued in ‘ ndem. A source’s failure to pay the assessed penalty
is a separate enforceable violation.
The Act limits EPA’S use of APO’s in two important respects.
The Agency cannot use an APO to address violations that occurred
more than one year before filing, or to address violations for
which the penalty (calculated i’n accordance with the Clean Air
Act Stationary Source Civil Penalty Policy) exceeds $200,000.
While both of these limitations can be waived by joint agreement
of the Administrator and the Attorney General, the limitations
remain in place at this writing. Counts which relate to
violations more than twelve months old should not be severed to
allow issuance of an APO. Likewise, counts should not be dropped
simply to bring the penalty assessment below $200,000. EPA
interprets the limitations to apply to all viable counts which
are known at the ti e of filing.
Not all cases with penalty amounts less than $200,000 and
with violations less than 12 months old are appropriate for
administrative enforcement. Please consult Michael Alushin and
John Rasnic’s October 29, 199]. memorandum titled “Guidance on
Choosing the Appropriate Forum in Clean Air Act Civil Enforcement
Actions” for a discussion of factors, such as evidence of
multiple or repeat violations, a need for court-supervised
injunctive relief, the necessity of extensive post-filing
discovery, and the existence of new legal issues, the presence of
which indicate that a case should be brought in the judicial,
rather than administrative, forum.
Civil Judicial Actions
Section 113(b) of the Act authorizes civil actions seeking
temporary or permanent injunctions and penalties of up to $25,000
per day for each violation. Arty enforcement action involving

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violations more than one year old, seek g a penalty in excess of
S200,G3O (where these limitations have not been waived) or
r.ecessitatiflg imposition of a compliance schedule requiring more
zhan or e year of activity on the part of the defendant, must be
filed as a civil action in accordance with Section 113(b) because
the r l ef sought exceeds the authorities of Sections 113(a) and
(d). The civil judicial (CJ) forum is appropriate when the
Agency believes it will need the court’s injunctive, discovery,
or contempt authorities, and when the case presents precedential
legal issues. Cases involving complex compliance issues are also
better suited to a judicial action as a compliance plan resolving
these issues can be negotiated as part of the consent decree
resolving the action, and will then be enforceable by the court.
Criminal Sanctions
Section 113 Cc) authorizes assessment of criminal sanctions
against any person, (including a corporation or utility) who
knowingly .olates a requirement or prohibition of Title IV.
Criminal sanctions may also apply if the violator knowingly
provides false information to the United States. Suspected
criminal activity should be reported either to the Regional
office of the Criminal Investigation Division or Regional
Criminal Enforcement Counsel. A separate civil action to address
civil violations may be pursued in the judicial or administrative
forum if immediate action is required to mitigate substantial
danger to human health or the environment or other specified
circumstances (see Procedures for Requesting and Obtaining
Approval of Parallel Proceedings, June 15, 1989).
Contractor Listing
Section 306 of the Act mandates that no federal agency
may enter into a contract with a person who is convicted of a
criminal violation of the Act which would require performance at
the facility where the violations occurred until such time as the
Administrator certifies that the violations giving rise to the
conviction have ceased. The Administrator may extend the
prohibition to other facilities owned and operated by the
convicted person. Regulations appearing at 40 C.F.R. Part 15
also provide the Administrator authority to prohibit contracts
with persona in continuing civil violation of the Act. Such
listing, whether mandatory or discretionary, can be a powerful
tool for leveraging compliance from a recalcitrant violator.
VIOLATIONS/EPA RESPONSE
This section presents a brief description of violations
under Parts 77, 75, and 72. For each rule, the violations are
ranked according to their importance to the acid rain program.
For instance, the two most significant violations of the CEMS
rule are monitor installation and data reporting. In the Excess

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9
!misSiOri rule, the most important violations are related to
ai wance holding and the payment of penalties for excess
icns requirements and allowance holding.
The specific enforcement response applicab].i for each of the
categor:es are presented in Appendices 1-3. The enforcement
responses lLsted reflect the recommended minimum response within
each category of violation depending on the violation’s
significance. According to the recommended enforcement
responses, the most important violations may require an APO as a
minimum. An NOV (or FOV for non-permit violations) should
precede such an APO. It is expected that any enforcement action-i
(except the Field Citition) involving a penalty will be
accompanied by an ACO.
The enforcement responses provide the enforcement
authorities with some flexibility. For certain minor violations,
the Region-may decide not to pursue the enforcement action after
issuing ar FOV if a subsequent investigation reveals that further
action is not warranted.
The enforcement agency should undertake any one or all of
the listed applicable actions, s appropriate, along with actions
in response to known violations of other air programs.
Since the enforcement staff is familiar with most of the
enforcement policies (Appendix 5), this guidance does not address
any details of these policies. A specific guidance on field
citations will be issued upon promulgation of the rule and will
be added to Appendix 5.
Excess Emissions Rule
The following is a general description of possible
violations under the provisions of the acid rain rule Part 77 -
Excess Emissions. Three categories of potential violations are
outlined below. Appendix 1. presents the specific minimum
enforcement vehicles appropriate for the violations of the rule.
• Deductions versus Offsets
The designated representative (CR) must sold enough
allowances in the appropriate compliance subaccount to cover the
deductions to be made in accordance with paragraph (a) or
paragraph (c) of section 77.5. An APO is a minimum level
enforcement response.
• Penalties for Excess Emissions
The owner or operator must pay to the Administrator within
60 days an excess emissions penalty, as calculated under
paragraph (b) of section 77.6. In all instances when the owner

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10
or operator fails to pay the penalty without demand, the EPA
shall either issue an APO or take judicial action.
• Offset Plans for SO.,
The excess emission provisions of the Rule require the
designated representative for the unit to submit to the
Administrator a complete proposed offset plan to offset excess
emissions of sulfur dioxide. The offset plan shall be submitted
riot later than 60 days after the end of any calendar year during
which excess emissions of sulfur dioxide occurred; Each day
after the 60 day deadline that the designated representative
fails to submit a complete proposed offset plan shall be a
separate violation of this part. The minimum enforcement
response is an APO.
CEMS RuLe -
The following is a general description of-violations under
the pro&i ons of the acid rain rule Part 75 Continuous Emission
Monitoring. Five categories of potential violations are outlined
below. Appendix 2 presents the specific minimum enforcement -
responses appropriate for the vjolations in each of the four
categories.
• Monitoring
The monitoring provisions of the Rule require the owner or
operator of the affected facility to measure opacity, SO 2 ,
NO, and CO 2 emissions for each affected unit by installing a CEMS
or approved alternative monitoring system along with the data
acquisition and handling system (DAHS) before the compliance
deadline. A minimum enforcement response for the violation of
this requirement is an APO.
• Reporting
The reporting provisions of the Rule require the designated
representative to submit all certification or recertification
notifications, certificatioi or recertification applications
monitoring plans, petitions for alternative monitoring systems,
notifications, electronic quarterly reports, and other
communications required by 40 CFR Part 75 to the Adft’inistrator.
Copies of the above requirements must be submitted to the
appropriate Regional Office of the U.S. Environmental Protection
Agency and appropriate State or local air pollution control
agency.
A minimum suitable enforcement response in this violation
category is an APO for failure to submit quarterly electronic
reports and a Field Citation for all other violations.

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ii.
• Cperatjo and Maintenance
The Operation and maintenance provisions of the Rule
‘ qt ’re the owner or operator of an affected unit to certify,
o erace, calibrate, and maintain each CEMS used -under the acid
rain program according to the quality assurance and quality
control procedures in 40 CFR Part 75, Appendix B. The owner or
operator also is required to ensure that all calibration gases
used to quality assure the operation of the instrumentation
required by 40 CFR Part 75 meets the defini.eion in section 72.2
of this chapter.
The owner or oper ator must use the appropriate reference
test methods included in 40 CPR Part 60, Appendix A to conduct
monitoring system tests for certification or recertification of
CEMS and quality assurance and quality control procedures.
Additionally, if an cut-of-control period occurs to a monitor or
CEllS, the owner or operator must take corrective action and
repeat ehe -tests applicable to the ‘out-of-control parameter” as
described n 40 CFR Part 75, Appendix B.
In all cases where there is a violation, the Region shall -
issue a Field Citation as a minimum.
• Missing Data Procedures
When the data for an affected unit has not been measured and
recorded, the Rule requires the owner or operator to provide
substitute data according to the missing data procedures in 40
CFR Part 75.
In all cases where there is a violation, the enforcing
agency shall at least issue a Field Citation.
• Recordkeepin
The recordkeepjng provisions of the Rule require the owner
or operator to maintain for each affected unit a file of al].
measurements, data, reports, and other information required by 40
CFR Part 75 at the source in a form suitable for inspection for
at least three (3) years from the date of each record.
Compliance determinations are made on the basis of a review of
the records at the production facility or company headquarters.
The owner or operator must also prepare and maintain a
monitoring plan, and update the monitoring plan whenever a change
has been made to either the certified C 4S or continuous opacity
monitoring system including the DARS or in the flue gas handling
system that requires recertification.
Generally, recordkeeping violations will be addressed
through the use of a Field Citation, as a minimum, issued by the

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12
Region with responsi.bility for the p1a t. In instances where the
inspector cannot verify the information in the quarterly report,
or the company has changed its recordkeeping procedures without
informing EPA, the Region will take enforcement-action after
consultation with OECA and in accordance with this guidance.
Permit Rule
The following is a genera ]. description of possible
violations under the provisions of the acid rain rule Part 72
Permits and minimum penalties for these violations. Five
categories of potential violations are outlined below. Appendii’
3 summarizes the discussion that follows. Unless otherwise
stated, actions are pursued by the Regions (or States in Phase
II, if the Regions delegate the responsibility)
• Emission Limits
For t ’iis category of violations the minimum acceptable
enforcement action will be an APO, but depending on the
circumstances and past record, a more serious enforcement action
(CJ, criminal) may be appropriate. Additionally, for the failure
to meet the required 302 reduction, allowances will be deducted
(based on the formula in section 72.42(f) (1) (i) (B)) from the
unit’s compliance subaccount for the year of the violation.
• Permit Requirements
This category contains requirements for retired units and
general permit requirements. If a DR does not follow the
procedures as required by the rule for permit modifications,
application of fast-track modifications or administrative permit
amendments, then the permitting authority will first send a
letter to the DR requesting further information. If the DR does
not respond to the letter, then the request will be denied. For
violations other than recordkeeping or procedural violations an
ACO, APO, or CJ (preceded by an NOV) may be needed.
• Designated Representative
This category of potential violations deals primarily with
the certification statements and complete permit application
submissions required of the DR. Where the required submissions
are incomplete on the deadline (e.g., not signed by the DR), ARD
should send a letter to the DR requesting that the submitted
document be completed and resubmitted within 30 days. If the
requested information is not resubmitted, MD will deny the acid
rain permit application or affected portion of the permit
application, and notify 0EC and the applicable Region for an
appropriate enforcement response.

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13
cases where a source has more than one DR, or does not
have a CO Ofl DR as required under a Phase tI repowering
extension plan until the existing unit is cermaneric Ly retired
under the olan, the enforcement response may range Erom an -
Aco/APO (preceded by an IOV) to CJ depending onthe circumstances
of the violation and past record of the DR.
• Required Methods, Conditions, and Procedures
If a unit does not meet the conditions to be considered in a
reduced utilization plan, then the request will be denied by ARID.
If a source does not properly activate or terminate a compliance
option, then the activation or termination may be denied. For
improper termination of a repowering plan, the enforcement
response should range from an FC through ACO, APO to CJ depending
on. the circumstances o the violation and past record of the DR.
For the other violations in this category; the enforcement
response may range from an ACO, APO, to CJ.
• Inc’ np1ete Submissicfls/SUbUliSSiOfl Deadline
The Rule requires .complete submission of information as
specified in the various subparts. If, for example, a compliance
plan is not complete as specified, a letter should be sent to the
DR requesting any additional information necessary (see section
12.61) . The DR shall submit the additional information within 30
days, or request an extension for submitting the information. If
the DR does not respond within 30 days, and an extension for
submission is not granted, that compliance plan option of the
acid rain permit application will be disapproved. The same is
true for the whole acid rain permit application. If the general
application is not complete, and the DR does not respond to a
request for additional information, then the entire acid rain
permit may be denied. If the source operates a unit without the
proper permit or permit application, then the enforcement
response may range from an ACO, APO to CJ.
For reporting violations listed in this category, the
minimum enforcement response is a Field Citation.
For permit applications, compliance options, dispatch system
identifications, retired unit exemptions and repoweririg plans,
the rule requires that submissions be made by certain deadlines.
If a submission is made prior to the deadline, but is not
complete, then the procedure mentioned in the Incomplete
Submission section will be followed. If a submission of the
required information is not made by the deadline, the request may
be denied and the enforcement response ranges from an ACO, APO to
cJ.
For new or retired units that are no longer exempted, or for
the commencement of operation. removal from operation. or

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14
decision to terminate repowering extension plans, failure to meet
the submission deadline will result in an ACO, APO to CJ.
NO. Rule (to be added)

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2
V OL TEI) REQUIREMENT
ENFORCEMENT
RESPONSE
ENFORCEMENT
LEAD
Operation &
Maintenance
Requirements
-
—
75.20
75.22
.
Certify a SO 2 CEMS with OARS and ’ flow
monitor, NO 1 CEMS with DAHS and a
diluent monitor, CO 2 CEMS with DAHS,
and a CONS with OARS
Field Citation
Administrative
Penalty Order
Civil Judicial
Regions
75.20
75.21
.
Operate, and maintain a SO CEMS with
DAHS and a flow monitor, NO CEMS with
DAHS and a diluent monitor, CO 2 CEMS
with OARS, and a CONS with OARS.
Field Citation
Administrative
Compliance
Order
Adminiat rat ive
Penalty Order
Civil. Judicial
Regions/States
75.24

Take corrective action and repeat the
teats applicable to the Nout of ontrol
parameter as described in Appendix B
Field Citation
Administrative
Compliance
Order
Administrative
Penalty Order
Civil Judicial
Regions/States

Miasin9 Data
Subptitution Procedures
,
75.30
Except as provided in
section 75.34
.
Provide substitute data for each
affected unit according to missing data
procedures in this subpart whenever
unit combusts any fuel and a valid hour
of 502 concentration data (ppm) 1 or
flow data (acth), or NO 1 emission rate
data (lb/mm BTU) has not been measured
and recorded f or an affected unit
Field Citation
Administrative
Compliance
Order
Administrative
Penalty Order
Regions/States

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3
U( ULATION

VIOLATED REQUIREMENT

ENFORCEMENT
RESPONSE
ENFORCEMENT
LEAD
Recordkeeping
Requirements
-
75.50

Maintain for each affected unit, ‘ i1e
of all measurements, data, reports, and
other information required at source in
a form suitable for inspection f or at
least three (3) years from the date of
each record
Field Citation
Administrative
Compliance
Order
Administrative
Penalty Order
Regions/States
Monitoring plane
.
75.53
Prepare and maintain a monitoring plan
Update the monitoring plan whenever a
change has been made to either the
certified CEMS or COMS including the
DABS or in the flue gas handling
system, that requires recertification
Field Citation
Administrative
Compliance
Order
Administrative
Penalty Order
Regions/states

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APPENDIX 1
ACID RAIN COMPLIANCE/ENFORCEMENT RESPONSE
EXCESS EMISSIONS RULE
1•• I•
;- .. .
R*G J TIQ$ 5 ’
‘
Y]OLkTED REQUIREMENT
.
ENFORCEMENT
i RESPONSE
ENFORCEMENT
LEAD
S F i: .i ,! •
EXCI8S EMISSIONS
—
Deductions of
Hold enough allowances in the
AdminiBtrative
ORe/AE D
allowances to offset
appropriate compliance subaccount to
Penalty Order
excess emissions at
cover the deductions to be made in
sulfur dioxide -
accordance with paragraph (a) or
Civil Judicial
section 77.5
paragraph c) of section 77.5
Penalties for excess
emissions of sulfur
Pay, without demand, an excess
emissions penalty, as calculatea under
Administrative
Penalty Order
ORE/AED
‘
dioxide and nitrogen
paragraph (b) of section 77.6
dioxides - section
Civil Judicial
77.6
Offset plans for excess
emissions of sulfur
Submit to the Administrator a complete
proposed of f set plan to offset excess
Administrative
Penalty Order
ORE/AED

dioxide - section 77.3
emissions, not later than 60 days
after the end of any calendar year
during which an affected unit had
excess emissions of sulfur dioxide
Civil Judicial

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APPENDIX 2
ACID RAIN COMPLIANCE/ENFORCEMENT RESPONSE
CEMS RULE
Report excess emissions of opacity to
the applicable State or local air
pollution control agency, in a fcirmat
specified by applicable State or local
air pollution control agency
Field Citation
Administ rat ive
Compliance
Order
Administrative
Penalty Order
UQUUTIQN
VIOLATED RRQUIR $ENT
ENFORCEMENT
RESPONSE
ENFORCEMENT
LEAD
CONTINUOU8 MI8SIQ}
$ONITO*1N0
‘I,

.
. .., . . - :: .:
Monitoring Requirementu
75.10
.

Install a SO 2 CEMS with DAHS and a flow
monitor, NO 1 CEMS with DAHS and a -
diluent idonitor, CO 2 CEMS with DAHS,
d a CONS with DAMS
Administrative
Penalty Order
Civil Judicial
Regions
Reporting Requirements
.
75.64
Submit electronic quarterly reports to
the Administrator
Administrative
Penalty Order
Civil Judicial
ORE/AED
75.60
75.61
75.62
75.63
.
Submit all certification or
recertification notifications,
certifications or recertification
applications, monitoring plans,
petitions for alternative monitoring
systema, and other communications
required to the Administrator
Submit copies of certification or
recertification notification,
certification or recertification
applications and monitoring plans to
the appropriate Regional Office of U.S.
EPA and appropriate State or local air
pollution control agency
Field Citation
Administrative
Compliance
Order
Administrative
Penalty Order
.
Regions.


75.65
States

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APPENDIX 3
ACID RAIN COMPLIANCE/ENFORCEMENT RESPONSE
PERMIT RULE
RWIULAT iON
VIOL TED REQUIREMENT
•
ENFORCEMENT
RESPONSE
ENFORCEMENT
LEAD
PERMITS REGULATION
Emission Limits
.
72 .42(1) (1) Ci)
Demonstration of at least 90 percent
reduction of SO 2 at a control unit
governed by an approved Phase I
extension plan.
Deduct
Allowances
Administrative
Penalty Order
Civil Judicial
Regions/States
72.42(t) (1) (ii)
Meet NO 1 emission limitation.
Administrative
Penalty Order
Civil Judicial
Regions/States
72.44
.
Not transfer allocated allowances to
any account other than the unit
accounts of other units at the same
source as the repowering unit.
Administrative
Penalty Order
Civil Judicial
Regions/States
Permit equirementO
72.8(d) (1)
Not emit any SO 2 and NO during
exempted period for retired unit.
Administrative
Compliance
Order
Administrative
Penalty Order
Civil Judicial
Regions/States
72.90
Submit annual compliance certification
.
,
Administrative
Compliance
Order
Administrative
Penalty Order
Civil Judicial
RegionsJstates

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2
RKOIJLATIQN
.
VIQ D REQUIREMEI4T
.
ENFORCEMENT
RESPONSE
ENFORCEMENT
LEAD
72.8
Not resume operation unless the DR
submits an Acid Rain permit
application for the unit not less than
24 months prior to operation.
t i . ’
Administrative
Compliance
Order
Administrative
Penalty Order
Civil judicial
Regions/States
.
72.9, 72.30
Have an Acid Rain permit or permit
application, and operate in accordance
with the permit or permit application.
Administrative
Compliance
Order
Civil Judicial
Regions/States
72.80, 72.81, 72.82,
72.83
Retain the required documents for 5
years unless otherwise specified.
Follow the proper procedures as
required for permit modifications.
,
Admir istrative
Compliance
Order
Administrative
Penalty Order
Civil Judicial
Regions/States
De ign4ted
Representative
72.20, 72.21, 72.23
signed certiticationaby the
authorized DR for all submissions.
Serve notice to the owners/operators
of the source of any written
determinations by the Administrator or
permitting authority.
Revised certificate of representation
following changes in owners,
operators. DR or alternative DR.
Administrative
Penalty Order
Administrative
Compliance
Order
Civil Judicial
Regions/States

72.44 Have common DR for units governed by Administrative Regions/StaLes
the plan under paragraph (b) (2) of Compliance
this section (Phase II repowering Order
extension) until unit is permanently Administrative
retired under the plan. Penalty Order
Civil Judicial

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EEQUI TIOW
VIOIJT*D 1 QUIREMENT
ENFORCEMENT
RESPONSE
ENFORCEMENT
LEAD
Required Methods,
Condition and
Procedures
72.7
For each exempted New Unit, deternVi’ ’e
sulfur content of the fuel by
specified method and retain records as
required.
Administrative
Compliance
Order
Administrative
Penalty Order
Civil Judicial
Regions/States
72.40, 72.41, 72.43,
72.44
Proper activation of a conditionally
approved compliance option.
Proper termination of a compliance
option. .
Admiflistrative
Compliance
Order
Administrative
Penalty Order
Civil Judicial
Regions/States
72.43
Meet requirements to be considered as
reduced utilization plan that has been
a roved by the overseeing agency.
Administrative
Penalty Order
Regions/States
Incomplete
8ubmi.es ion/thiLmi eion
Deadlines
•
72.7, 72.6
.
Complete Acid Rain permit when new
unit is no longer exempted.
Retired units exemption petition.
Administrative
Compliance
Order
Administrative
Penalty Order
Civil Judicial
Regions/States
72.9, 72.30. 72.40,
72.41, 72.42, 72.43,
72.44
Complete Acid Rain permit application
or permit reapplication including
compliance options.
Administrative
Compliance
Order
Administrative
Penalty Order
Civil judicial
Regions/States

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4
I VIO T D R QUIR $ENT
.
ENFORCEMENT
RESRONBE
ENFORCEMENT
LEAD
Complete identification of dispatch
system, or petition to treat as the
dispatch system for an owner’s portion
of the unit, the dispatch system qf J 1
another unit. Submission of required
reports for the dispatch system.
Administrative
Compliance
Order
Administrative
Penalty Order
Civil Judicial
Regions/States
Repowering extension plan design and
engineering contract requirements
removal from operation, commencement
of operation, or decision to
terminate.
Administrative
Compliance
Order
Admir4istrative
Penalty Order
Civil Judicial
Regions/Slates

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APPENDIX 4
ACID RAIN NO Rule

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APPENDIX 5
EPA ENFORCEMENT GUIDANCE DOCUMENTS

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Index of Guidances Relevant to Initiation of E fOrc.m.nt Actions
IN THE GE IERAL ENFORC 4ENT POLICY CO ENDITJM
RJF!RRAL PROCE88
Memorandum of Understanding Between DOS and EPA (GX-3)
Policy on Invoking Section 9 of the DOS/EPA Memorandum of
Understanding (GM-63)
Draft DOT/EPA Litigation Procedures (GM-B)
Process for onducting Pre—Referral Settlement Negotiations on
Civil Enforcement Cases (GM—73)
Model Litigation Report Outline and Guidance (GX-48)
General Operating Procedures for EPA ’s Civil Enforcement Program
(GM— 12)
Implementing Nationally Managed or Coordinated Enforcement
Actions (GM—35)
Headquarters Review and Tracking of Civil Referrals (GM-26)
Expansion of Direct Referral of Cases to DOT (GX-69)
Implementation of Direct Referral for Civil Cases (Q(-l8)
DOT Procedure for Returning Certain Wtfiled Cases to EPA for
Further Processing ( I -7$)
Hold Action Requests ( I-9O)
P LTIU
Policy on Civil Penalties (QI —21)
A Framework for Statute-Spec if ic Approaches to Penalty
Assessments (GX’-22.) —
Documenting Penalty Calculations and Justifications in WA
Enforcement Actions (GM-83)
Remittanc. of Fines and Civil Penalties (GX—38)

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Guidance for Calculating the Economic Benefit of Noncompliance
for a civil Penalty Assessment (GM—33)
Division of Penalties with State and Local Governments (GM-45)
Guidance on Determining a Violator’s Ability to Pay a Civil
Penalty (GM-56)
Policy on the Use of Supplemental Enforcement Projects in EPA
Settlements (GM—77)
Guidance on Calculating After Tax Net Present value of
Alternative Payments (GM-Si)
Use of Stipulated Penalties in EPA Settlement Agreements (GM 75)
Procedures for Assessing Stipulated Penalties (GM—67)
CONTRACTOR L TXNQ
Implementation of Mandatory Contractor Listing (GX-32)
Guidanc, on Implementing the Discretionary Contractor Listing
Program (GX—53)
Strrx II NTI
Form of Settlement in Civil Judicial Cases (GX—42)
Guidanc. on the Us. of Alternative Dispute Resolution irr EPA
Enforcement Cases (QI 62) -
Enforcement Settlement Ngotiations (GM-52)
Multi Media S.ttlem.nta of Enforcement Cases (QI-80)
Interim Policy en the Inclusion of Pollution Prevention and
Recycling Provision in Enforcement Settlements ( 79
Final EPA Policy on the Inclusion of Environmental Auditing
Provisions in Enforcement Settlements (CX-52)
Guidance for Drafting Judicial Consent DeCrees ( I-’i7)
/ Procedures for Modifying Judicial Consent Decrees ( t-68)

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PAU.LL!L PROCIUINa
Revised EPA Guidance for Parallel Proceedings (GM-fl)
Procedures for Requesting and Obtaining Approval of Parallel-
Proceedings (GM—82)
Supplement to Parallel Proceedings Guidance and Procedures for
Requesting and Obtaining Approval of Parallel Proceedings (GM-84)
Air-SDecific Docu entg
Timely and Appropriat. Enforcement Response to Significant Air
Pollution Violators - John S.itz and Robert Van Hsuvelsn,
February 7, 1992
Guidance on Choosing the Appropriate Forum in Clean Air Act Civil
Enforcement Actions Michael S. Alushin and John Rasnic, October
29, 1991.
Clean Air Act Stationary Sources Civil Penalty Policy - William
G. Rosenberg and Edward E. Reich., October 25, 1991.

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APPENDIX 6
ACID RAfl’ SUPPLEMENTAL ENFORCEMENT RESPONSES

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ATTACHMENT 2
ACID RAIN ADDENDUM TO THE
TIM Y AND APPROPRIATE ENFORCEMENT RESPONSE TO
SIGNIFICANT AIR POLLUTION VIOLATORS

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Acid Rain Addendum to the Ti:neiy and Appropriate Enforcement
Response to Significant Air ?o1lut .ori Violators
I. sCOPE & GUIDANCE AP?L:cAsIL:TY
is guidance is an addendum to the “ Ti elv and A rppria e
nfcrce .ent Res onse to Significant Air ?ollut:on Violators” ,
issued on February 7, 1992 a.nd is apclicable to violators of the
Acid Ra. .ri ?: gra.rn (40 CFR Parts 72, 75, and 77). This guidance
lays cut he definition of “significant violator” for the Acid
Rain Program since sources covered by the Acid Rain Program were
not included in the definition of ‘ significant violator” in the
February 7, 1992 guidance. For areas not ccvered in this addendum
(i.e., timelines for enforcement actions, etc.), refer to the
‘ Timelv and ADoro riaté Enforcement Res onse to Sianificpnt Air
Pollution Violators. ”
The Acid Rain addendum is an initial step towards defining a
significant violator of the acid rain program. It is expected
that the addendum will be modified in future years to reflect
experience’s in the implementation and evolution of the acid rain
program.
II. SIGNIFICANT VIOLATOR (511) DEFINITION
Agencies shall deem a source to be a SV if it is a “Major”
source (as defined by the CAAA) and it violates one or more of the
following requirements:
A. install, certify, operate and maintain required C fS/COMS
system (including DAHS) or approved alternative,
40 CFR §75.10(a) & (b);
B. have an Acid Rain Permit, §72.9(a) (2) (ii);
C. held allowances, as of the allowance transfer deadline,
inthe unit’s compliance subaccount, not less than the
total annual emissions of sulfur dioxide for the previous
calendar year from the unit §72.9 (c) (1) (i);
D. subm{t a complete proposed offset plan, §77.3;
E. sii) r (t electronic quarterly reports to the administrator,
§75.64;
F. for units governed by a Phase I extension plan,
demonstrate at least 90% reduction of S02 in 1997,
1998, or 1999, §72.42(f) (1) (i);
G. ensure that all certification tests for the required
C S/COMS are completed not later than the specified
dates, §75.4;
H. any provision of either a Federal Consent Decree or
Federal Administrative Order resolvina Clean Air Act
violation(s) ;

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2
. any subs an te p vi on o a Sta Judicial Order : a
State A s::at.’,e Order ,h2.cn as ‘asued for a
ur.der1y g ?%C.d Ra: .ola: r..
T e fol1 w g 3ec: .or.s are the same as i.n the “ T irne1v and
: - r:ate for e ent Response : Si :fi pnt- Air ? 11utj
:s”, :s5Led n Februay 7, .D92 (.SV/T&A pOlLcy)
?RcczSS:Nc OF s:GNIF:Ca ’r ‘I:CLATORS
:i. m 4 , TIMELIN FOR IFORC T ACTION
V. ?E IALTIES
VI. CONSULTATION AND DATA TRANSFER
The following r .nking criteria niay be used in con unceion
with Appendix A to the SV/T&A policy:
Criteria Environnental Weight
Factor/Violation
1. Failur, to have an acid rain permit 10
ll
2. Fail re to submit a complete proposed offset 10
plan or pay without d Artd an excess emissions
penalty
3. Failure to install, certify operate and 10
maintain required C S/C0MS
4. Failure to suhi, jt electronic quarterly reports- 5
or complete all certification tests for the
required C (S/COXS by the specified dates
5. Failur, to hold allovenc,. as of the 5
transfer deadline
6. Failur, to demonstrat, at least 90% reduction 5
of S02 for its governed by a Phase I
extension plan

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3

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United States
Environmental Protection
Agency
Air and
Radiation
(6204-J)
EPA 430-R-96-004
May 1996
&EPA Acid Rain Program
Update No. 3
Technology and Innovation
Printed on paper that contains A C ID RA IN
jSJ Hecycled/Hecyclable _________
at least 50% recycled fiber
SOP.. Emissions Drop DrámaticaUy i
at Phase I Units
PROGRAM

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T he Acid Rain Program Overview
T I he Acid Rain Program was established under Title IV of the 1990 Clean
Air Act Amendments. The program calls for major reductions of sulfur
dioxide (SO 2 ) and nitrogen oxides (NO ), the pollutants that cause acid
rain, while establishing a new approach to environmental management. The
program also sets a permanent cap on the total amount of sulfur dioxide that may
be emitted by electric utilities nationwide, about one half of the amount emitted
in 1980.
Acid rain causes acidification of lakes and streams and contributes to damage of
trees at high elevations. In addition, acid rain accelerates the decay of building
materials, paints, and cultural artifacts, including irreplaceable buildings, statues,
and sculptures. Prior to falling to the earth, SO 2 and NO gases and their particulate
matter derivatives, sulfates and nitrates, contribute to visibility degradation and
impact public health.
The first phase of the program began January 1, 1995, with 263 units at 110
electric power plants required to comply with emission limitations for SO 2 . An
additional 182 units have joined Phase I as substitution or compensating units.
The first phase of NO reductions began January 1, 1996. The second phase for
both 502 and NO begins in 2000 and covers more than 700 additional plants,
which supply most of the fossil-fuel-fired electricity capacity in the United States.
The Acid Rain Program represents a dramatic departure from traditional command
and control regulatory methods that establish specific, static emission limitations.
Instead, the program introduces a trading system for SO 2 that facilitates lowest-
cost emissions reductions and a cap that ensures the maintenance of the
environmental gain. The program features tradeable 502 emissions allowances,
where one allowance is a limited authorization to emit one ton ofS0 2 . Allowances
may be bought, sold or banked by utilities, brokers, or anyone else interested in
holding them.
The emissions cap and market-based aspects of the Acid Rain Program also
serve to promote pollution prevention, such as energy efficiency or renewable
energy generation. Because the tradeable allowances have a market value, utilities
have the financial incentive to emit less SO 2 in order to conserve allowances

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I nnovation for Cleaner Air
T I he third Acid Rain Program Update focuses on the innovation and
technological advances fostered by the first national emissions trading
program. This market-based system provides a strong incentive for
cleaner, more efficient technologies. The basic principle is simple: for every ton
of pollution reduced or avoided by compliance measures, an extra allowance is
saved.
E Recent studies by Resources for the Future, the Electric Power Research Insti tute
missions (EPRI), and Argonne National Laboratory have highlighted the efficiency and
reductions innovation in pollution controls that have accompanied implementation of the
achieved in 1995 Acid Rain Program. For example, scrubber costs have dropped dramatically in
were 3.4 million the past six years and are now 40 percent or more below 1989 levels. At the
tons greater than same time, scrubber sulfur removal efficiencies have improved from 90-92 percent
the target Ieve in 1988 to 95 percent or more in retrofits to utility units affected by the first phase
for this first year of the Acid Rain Program. There have also been innovations in blending of
of the program. high- and low-sulfur coals. In the past, it was assumed that blending would cause
problems for utility boilers, but technical problems have been largely worked out
through experimentation prompted by Title TV compliance requirements.
Innovative responses to Title IV of the CAAA span several other areas as well.
The allowance market, for example, is increasingly resembling more established
commodities markets; both industry and EPA are developing sophisticated
computer tools to report and track emissions and allowances; and environmental
and other groups have used allowances in several unique transactions.
The results of the first year of implementation of the Acid Rain Program show
how all of this innovation is paying off. Recent statistics on emissions reductions
and allowance trading for 1995 are noted on pages 4-7. Emissions reductions
achieved in 1995 were 3.4 million tons greater than the target level for this first
year of the program. In addition, nearly 30 million allowances were transferred
in private transactions.
In the coming year, EPA and others will continue to assess the operation and
results of Title IV of the CAAA. Your suggestions and insights about the early
lessons learned from this innovative approach to environmental protection are
welcomed.
Director, Acid Rain Program
‘A

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S ince the Last Update. .
.
P 1 ermitting
L I State and local authorities with approved acid rain and Title V regulations
will be issuing Phase II acid rain permits. To date, 73 of the 79 state and
local authorities have EPA approved acid rain regulations. Ninety-seven percent
of Phase II sources required to submit permit applications have done so.
Continuous Emission Monitoring
As of late March, the Continuous Emission Monitoring Systems (CEMS) at 898
Phase II units had been fully certified; 696 coal-fired units and 202 oil/gas fired
units, bringing the total number of Phase I and II units with certified CEMS to
1,154.
Emissions Data
In 1995, EPA reviewed over 6,500 quarterly reports for Phase I and Phase II
units. Utilities are increasingly opting for electronic submittal of these required
quarterly reports, considerably increasing the efficiency of the reporting process.
In addition, EPA has completed a preliminary analysis of the Phase I emissions
and monitor performance data for 1995. See pages 4 and 5 for details.
Annual Reconciliation
January 30 of this year was the deadline for 1995 allowance transactions and
1995 fourth quarter emissions reports. Annual Compliance Reports for all Phase
I units were due to EPA by March 1. Preliminary national statistics regarding
SO 2 emissions and allowance deductions are shown on page 4.
Pollution Prevention
On December 8, 1995, EPA announced the largest award ever from the Acid
Rain Program’s Conservation and Renewable Energy Reserve, created to
encourage pollution prevention by electric utilities. In this, the fifth award to
date, 10 utilities were awarded 8,635 allowances for undertaking energy
conservation and renewable energy efforts, bringing the total number of bonus
allowances awarded under the program to 12,816. See page 14 for details.
Nitrogen Oxides Reduction Program
In January 1996, a rule governing Phase II, Group 1 and Group 2 boilers was
proposed. This rule would implement the second stage of the NO program by
establishing emission limitations for certain coal-fired units and revising emission
limitations for others.

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Opt-in Program
The Opt-in Program has received its first four applications from combustion
sources seeking to enter the Acid Rain Program. The four applications received
to date are from the Aluminum Company of America (ALCOA), Dupont, Union
Camp, and the City of Dover. All are being reviewed by EPA. lithe applications
are accepted, these sources will receive their own allowance allocations. By
undertaking emission reductions, opt-in units can generate extra allowances to
sell to utility units.
Enforcement
IES Utilities of Cedar Rapids, Iowa, pennanently surrendered 589 allowances
and paid a penalty of $25,630 under a consent order with the EPA in September
1995. JES allegedly failed to complete timely certification testing of continuous
emission monitors required under the Acid Rain Program.
Early Reduction Credits
In November 1995, Union Electric was awarded 314,248 allowances under the
early reduction credit program. This program was created by Congress to provide
an additional source of allowances to utilities that had switched a substantial
portion of their generation to non-fossil fuel fired facilities during 1980-1985.
The two utilities eligible for this program, Union Electric and Duke Power, may
receive allowances if they reduce the emissions at their fossil fuel units before
they are required to under Title IV.
Small Diesel Refiners
In July 1995, 28,215 allowances were awarded to 19 refiners under the small
diesel refinery program. Allowances are awarded to small diesel refineries that
desulfurize fuel from October 1, 1993 through December 31, 1999. Because
refiners do not need the allowances to comply with any provision of the Clean
Air Act, they may receive a financial benefit by selling them.

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E missions Data
12
1
Annual SO 2
10
Emissions
8
(Million Tons)
6
•
4
2
0 L
i i 995 marked the first compliance year for Phase I of the Acid Rain
Program. Chart 1 shows that in 1995 emissions declined sharply at the
445 Phase I affected electric
_______________________________________ utility units. Ninety-five
percent of these emissions
reductions came from the 263
original Phase I units listed in
the Clean Air Act
Amendments. Emissions at
these large, mostly coal-
burning facilities were nearly
5 million tons below 1980
levels. This represents a
decline in emissions at these
units of more than 50 percent
since 1980.
1980 1985 1990 1995
The additional 1995 reductions
came from 182 substitution and
compensating units. These are Phase II units that became affected by Phase I
through special provisions of a compliance plan for one or more of the original
263 Phase I units.
Chart 2 compares the total 1995 emissions reductions at the 445 Phase I affected
units and the total number of 1995 allowances. Phase I allowances are broken
into three categories: (1) the annual allocation for the original 263 Phase I units
plus additional allowances earned by those units under the “Phase I extension”
early scrubbing provision, (2) allowances at substitution and compensating units,
CHART..., 2
1995 Emissions and Allowances
Emissions were 3.4 million tons below allowable levels in 1995
Annual SO 2
Emissions and
10
8
.
6
Other
A Substitution and Compensating Units
• Original 263 Phase I Units
Allowances
(in Millions)
4
2
0
—
Allowances
Emissions
1995
1995
5.3
Page 4
CHARTjJ
SO 2 Emissions
445 Phase I Affected Utility Units
Update 3

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and (3) other allowances earned from special allowance reserves such as the
auction and the Conservation and Renewable Energy Reserve. As Chart 2 shows,
emissions were 3.4 million tons below the allowable level in 1995, which represents
extra emissions reductions of nearly 40 percent.
The EPA has also compiled data on emissions rates achieved by boilers involved
in the first stage of the NO reduction program. Of the 33 boilers identified by
EPA and the Utility Air
Regulatory Group (UARG) as
having installed simple low NO
burners, all submitted data
________________ showing that they met the Phase
I emission standard of 0.50 lbs/
mmBtu for dry bottom wall-
_______________ fired boilers and 0.45 lbs/
mmBtu for tangentially fired
boilers (see Chart 3).
. CHARt 3 . 1
Performance of Low No Burners
x
Emissions rates achieved by installing low No burners are well below
levels needed for compliance.
0.6
0.5
0.4
0.3
0.2
0.1
0
I • Phase I Required
Emission Rate
•Average Emission Rate
i of Low Nox Burner
Dry Bottom
Tangentially
Wall-Fired
Fired Boilers
Boilers
In addition to analysis of the
emissions data, EPA has tracked
statistics on monitor perfor-
mance, validating the high
accuracy and reliability of
monitors that are used to collect the emissions data. Over 93 percent of all Phase
I and Phase II monitors achieved relative accuracies of less than 7.5 percent, well
below the required 10 percent standard. Furthermore, after the first two years of
operation, over 95 percent of the monitors at Phase I units have remained functional
90 percent of the time.
Finally, review and analysis of utility emissions data was greatly facilitated over
the past six months as more and more utilities opted to submit data by direct
electronic transfer. In the first quarter of 1995, a few did so as part of a pilot
program; in the second quarter, roughly 10 percent of all submissions were in
electronic form; by the third quarter, 25 percent of the data was reported
electronically; and by fourth quarter 1995, nearly 40 percent of emissions data
arrived at the EPA in this fashion.
A
Update 3
Page 5

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D evelopments in Allowance Trading
T I he allowance market is alive and well. Transactions have increased steadily
since 1994, and participants are developing innovative ways to structure
allowance deals. While EPA does not
_______________________________________________________________ track the trading of allowances, the
Agency does track in its Allowance
_____________________________________________________________ Tracking System (ATS) the transfer of
ownership of allowances that will be
used for compliance. By observing
these allowance transfers, one can
draw some conclusions regarding the
level of trading activity (see Chart 4).
ATS transfers began in March of 1994.
As of March 31, 1996, ATS had
recorded over 2,000 allowance
transactions involving the transfer of
over 40 million allowances (see Chart
5). Of those 40 million allowances,
nearly 30 million were transferred by
private parties. (The remainder were transfers from EPA to private parties
under various provisions of the Act.) Private transfers included trades
between companies, shifts of allowances within utility companies, and
reallocation of allowances between multiple owners of the same utility
units. All in all, nearly 90 percent of Phase I affected units have participated
in some sort of private allowance transfer.
HA
Allowances Transferred
Nearly 30 million allowances have been transferred in private transactions.
50
40
20
10
30
Private Transfers
S S
3/94 6/94 9/94 12/94 3/95 6/95 9/95 12/95 3/96
Private Transfer - These transfers were submitted by Authorized Account
Representatives for market accounts. (EPA does not attempt to determine whether
transfers are “trades” in which money is exchanged.) Over 20 million allowances
transferred are classified by EPA as reallocations (e.g. movement from a unit account
to a general account) and some may became intra-utility transfers In the future.
EPA Transfers - Most of these transfers involved movement of allowances from EPA
accounts to market accounts.
CHART 4
Allowance Market Transactions
Transfers 200 [ _ II
1/30114 1130/14 12/31114 3131115 1/30/15 1130 / 15 12/3115 3/31116
Quarter Ending

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As of December 31, 1995, EPA estimates that electric utilities had acquired over
4.3 million allowances from brokers, fuel companies, and other utilities (see
Chart 6). An additional 0.5 million allowances were transferred between units
within the same utility company.
Allowance prices have generally
dropped, according to two different
price indexes developed by allowance
brokerage companies (see Chart 7).
This trend was also apparent in the
recent allowance auction run by the
Chicago Board of Trade, where the
clearing price in the spot auction was
$66.05. The reported market price
rose slightly in April, however,
according to both price indexes.
Some market observers believe low
allowance prices are due primarily to
larger than expected emission
reductions, which have increased the
supply of allowances and depressed
prices. A key factor in the sharp drop
in emissions levels and allowance
prices may be the availability of low-
sulfur coal at lower than expected costs
(including lower than expected rail
transportation costs).
CHART7I -
Allowance Price Trends
Allowance prices have dropped substantially since the Program’s inception.
Allowance 160
Price in — Emissions Exchange
Dollars 140 . - - Canto Fitzgerald
120
100
80 1
60
9/94
5/95
11/94
1/95
3/95
7/95
9/95
11/95
1/96
3/96
Month/Year
P age7
CHART6’I Allowances Acquired by
Utility Unit Accounts 3/94-12/95
Utilities have acquired over 4.3 million allowances from other utilities, brokers, and
fuel companies, according to the ATS. An additional 0.5 million have been trans-
ferred between plants or units within the same operating company.
inter Utility
77.6%
_______ ‘ ue1 Co. to Utility
intra Utility Broker to Utility 1.1%
10.6%
4,813,056 Allowances
Inter-Utifity Transfer - Any transfer of allowances from one utility company’s operating
account to a different utility operating, company’s account utilitias may have the
same holding company but have separate operating companies)
Intra.UdUty Transfer - Any transfer from plant to plant (or fràm unit to unit’ within a
plant) within the same operating company.
Broker to UtIlity Transfer Any transfer from an allowance broker to a UtIlity
l UII Company to Utility Transfer Any transferfrom a fuel süpplierle.g. coal, gàs)tu
a utility.

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Developments in Allowance Trading (cont. )
___
Increasingly sophisticated transactions are occurring in the allowance market,
such as allowance swaps, fuel bundling, futures, forward contracts, and options
trading. Although EPA does not track prices or contract terms, conversations
with company officials have confirmed the existence of these transactions.
An example of an allowance swap, the exchange of allowances of different vintages
or years between two parties, was entered in the ATS in October of 1995.
Allegheny Power transferred a total of 20,200 vintage 1996 and 1997 allowances
to Duke Power Company. Duke Power in return transferred 20,000 1995
allowances to Allegheny Power. Assuming no cash was exchanged, this swap
would demonstrate that the market valued 1995 allowances at a premium over
1996 and 1997 allowances (the premium here is represented by the extra 200
allowances received by Duke Power).
An example of fuel bundling, combining the sale of fuel with allowances, was
recorded in ATS in November of 1995. Peabody Coal Sales Co. transferred
2,195 vintage 1995 allowances to Big Rivers Electric Company, presumably in
conjunction with the delivery of coal. Fuel bundling is often done to help the
utility comply with the Clean Air Act by providing allowances to offset the burning
of higher sulfur coal.
According to allowance brokers, both forward contracts and options to buy also
occur in the allowance market. In a forward contract, a purchaser can contractually
agree to buy a number of allowances for delivery in the future at an agreed upon
price. In an option to buy transaction, a party can negotiate to buy the right to a
specific number of allowances over some time period.

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C ompanies Develop Innovative Software
i i “ fr
M anaging allowances and emissions is both an environmental and a business
endeavor. Several electric utilities and other companies have developed
software to help lower costs and improve efficiency as they track allowance
and emissions information. With these systems, utilities can check whether they
are meeting internal compliance goals well before the end of the year, when
emissions and allowances must be reconciled. This enables utilities to make
better informed and more efficient decisions on compliance and allowance purchase
strategies. Following are brief
descriptions of some of these software systems:
Allowance Management System
Allowance Tracking Workstation
The Allowance Tracking Workstation was
developed by Electric Software Products
Company with the collaboration of ten electric
utilities. The ATW provides a means for
utilities to track their allowance holdings and
transaction activity across a plant or plants.
Utilities use the software to track the history
and status of allowances, account for the
allowances internally and to the Federal Energy
Regulatory Commission (FERC), and manage
units that are co-owned with other companies.
Allowances are compared to actual emissions
and emission goals set by management. The
ATW also produces an EPA reconciliation
report that compares the allowances recorded
in the software to the EPA database.
Motivated by the
need for a comput-
erized means of in-
ternal allowance
tracking and ac-
counting, Ameri-
can Electric Power
Company (AEP)
developed a set of
computer applica-
tions to handle
functions including
the receipt and
storage of emis-
sions data, intelli-
gent management
Update3 :
Page 9
$CftEEN.i :1:. :l
Allowance Tracking Workstation
Cumulative Emissions vs Plan
05/30/95
UI
S02
Legend
Actual EmissIons
Proj.ctsd EmIssions
—0— Bud .tsd AUowsncs.
—.— EmissIons Cap
Account name:
LAKESIDE UNITS
Plan name:
DEFAULT PROJPLM J AA
Emission updated:
3l/9E
SCREEN 21
Allowance Management System
Several electric
utilities and other
companies have
developed
software to help
lower costs and
improve
efficiency as they
track allowance
and emissions
information.
Aliow mce Tmacking Mana9emenm information Stjstnrn

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Innovative Software (cont.)
of the inventory of allowances, and automated accounting transactions. The
system can compare emissions year-to-date with management goals and can man-
age the review and submittal of emissions reports to the EPA. The software
provides for data quality control and for coordination of different internal data
systems and sources of information.
31
SO 2 Easy
- R i
[ Ie &trrn l Ip
lJ2 !O
Marracement Reports
connie;fl
MS AcCOunt Tppi
Ti s!e i 1or
Ailowance
Allowance “802 EASY
Acouisilion
j (
SO 2 EASY
SO 2 Easy, developed by Wisconsin Electric
Power Company and offered by Sargent &
Lundy, automates the inventory management
and accounting process for SO 2 allowances.
SO 2 Easy is configured to automatically read
SO 2 emissions from the CEMS database and,
per FERC guidelines, expense the appropriate
number of allowances at the average
allowance cost on a monthly basis.
Allowances are then retired with the EPA on
an annual basis to complete the compliance
cycle. Wisconsin Electric is currently using
this system to report its allowance transactions
to the EPA.
Update 3
Page 10

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E I PA Data Systems and Software Packages
Electronic storage, manipulation and analysis of data is crucial to the success of
the Acid Rain Program. The EPA must track and review hourly emissions data
from over 2,000 electric utility units and must store and transfer billions of dollars
worth of emission allowances. Data must be conveyed promptly and accurately
to both the regulated community and the public. Following is a summary of the
Acid Rain Program’s data systems and software packages:
Allowance Tracking System (ATS): Provides a computerized database for all
allowances held under the Acid Rain Program. The system records all transactions
electronically and performs deductions from accounts for compliance purposes.
Emissions Tracking System (ETS): Quality assures each electric utility unit’s
emissions. The system handles vast amounts of information and is the largest
data system ever used as an essential operating component of an environmental
program. Over 6,500 quarterly data files were received in 1995, containing
approximately 791 million pieces of data.
ETS-PC: Aids utilities in the preparation, review, and submittal of quarterly
emissions reports. This software allows utilities to review their data prior to
submission and then to send the data electronically to EPA’s mainframe computer
via modem.
Annual Reconciliation System (ARS): Combines permitting, emissions and
allowance data to determine each unit’s compliance status.
Certification Review Software (C-REV): Automatically records and reports the
results of a unit’s continuous emission system certification test to the EPA. The
software checks that the monitors are accurately and continuously recording
emissions.

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I nnovation in Environmental Advocacy:
A l small but growing number of environmental, non-profit, and student
______________________ organizations have purchased allowances with the goal of retiring them
R • and reducing pollution. Retiring an allowance ensures the emission of
etiring an. , , one less ton of pollution into the air in a given year, since the total number of
allowance allowances is fixed under the acid rain emissions cap.
ensures the” .
emission of one I One of the most active organizations in the allowance retirement movement is the
!ess ton, of I I I National Healthy Air License Exchange (INHALE), a group created with the
pollution into the mission of acquiring and retiring SO 2 allowances, and eventually expanding into
air in’ a given I I other developing market-based programs. INHALE’s philosophy is similar to
year; since, the : that of the Nature Conservancy, which purchases undeveloped land to preserve
total num ber its natural character. Under its allowance retirement program, INHALE purchased
allowances is’ an allowance at the first auction in 1993. According to Executive Director Daniel
fixed under the Jaffe, the organization has raised about $100,000 in its three-year history, mostly
from individual contributions. Contributions are solicited through the sale of
aci rain Clean Air Certificates, which document the amount of pollution a given
emissions cap. , contribution has prevented.
In the 1995 auction, INHALE purchased 156 allowances. The purchase of a
portion of these was made possible by the donation of over $3,000 raised by the
150 sixth grade students at Glens Falls Middle School in the Adirondack Mountains,
an area plagued by acid rain. This enabled INHALE to retire 21 allowances
(over 40,000 pounds of SO ) in the name of the children. This year, Glens Falls
and teacher Rod Johnson raised $18,000 to lead an effort of 15 elementary,
middle, and high school groups submitting bids in the 1996 auction. Glens Falls
took home 292 allowances, and INHALE bought a total of 454 in their biggest
purchase to date.
Several other student groups are involved in the allowance market. The Maryland
Environmental Law Society (MELS) bought and retired an allowance in the 1994
auction, and became the first student group to do so. Since then, several other
law schools have joined in the effort (see box on page 13).
Another organization that has raised funds to retire allowances is the Working
Assets Funding Source. This non-profit public-interest company regularly
contributes 1 percent of its revenues to public-service organizations and uses its
monthly bills to solicit charitable donations from customers for various featured
causes. A summer 1993 campaign asked the 80,000 customers of its long distance
telephone service to add a small donation when paying their bills to support “our
goal to reduce SO 2 emissions by 300 tons. . . and spark a movement to do much
more.” The result was $55,000 in donations, which enabled the group to purchase
289 allowances.
Allowances have also been retired through charitable donations. An agreement
between Arizona Public Service Company and Niagara Mohawk Power
Corporation, for example, resulted in the donation of 25,000 allowances to the

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Allowance Retirement
Environmental Defense Fund. In another transaction, Northeast Utilities of
Connecticut donated 10,000 allowances to The American Lung Association. The
Lung Association has since contacted other utilities through its local chapters in
an effort to receive further donations to reduce pollution.
Advocates of retiring 502 allowances believe that allowance retirement achieves
several benefits. The most obvious is a reduction of pollution resulting from the
availability of one less allowance to emit SO 2 . Another by-product is the possibility
of eventually driving up the price of allowances, thereby encouraging utility
purchase of pollution control equipment or energy efficiency for compliance. A
final impact is an increase of public participation and awareness of clean air
issues in particular, and the environment in general.
Although some utility companies have donated allowances to non-profit groups,
others have expressed concern about allowance retirement. For example, one
utility representative told National Public Radio in April 1995 that “if for whatever
reason sufficient emission allowances were not available for us to continue to use
our coal plants as they’re currently configured, then we would have to invest in a
more expensive technology.” Other observers have noted that extensive funds
would be required to purchase and retire enough allowances to impact the allowance
market.
Regardless of whether retiring allowances will have a significant impact on
emissions and compliance costs, some have argued that there is symbolic
importance to this new type of environmental advocacy. Supporters of this
approach suggest that the option to retire allowances democratizes pollution
abatement by empowering individuals and non-governmental organizations to
take direct action to reduce pollution.
American Lung Association (ALA)
Environmental Defense Fund (EDF)
INHALE
Working Assets
Environmental Law Groups at
University of Maryland, Duke,
CUNY, Detroit, 1-lamline, New
England, University of Michigan.
Thomas M. Cooley, University of
Minnesota, Valparaiso and Catholic
University
Acid Rain Retirement Fund
NRDC
World Charitable Trust
10,000
25,000
611
289
48
16
1
1
Donation
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
‘This list of holdings may not be all-inclusive. The two donations to ALA and EDF are not documented in
ATS.
There is symbolic:
importance to.
this new type of
environmental: : :
advóààày. I :.; :
Donation

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C onservation and Renewable Energy Reserve
B onus Allowance Recipients to Date
The following table lists the utilities that have been awarded allowances from the Conservation
and Renewable Energy Reserve:
Number of
Name of Recipient Allowances tnitiative
_______ - -— Awarded - ___________
City of Austin 97 Commercial. residential, and municipal efficiency programs
New England Electric System
.
(Naragansett Electnc, Massachusetts
.
Electric, Granite State Electric)
589
.
Commercial, industrial, residential efficiency programs and a
.
landfill gas renewable energy project
Portland General Electric
783
Commercial, industrial, and residential efficiency programs
Puget Sound Power and Light
2,210
Commercial, industrial, and residential efficiency programs
Florida Power and Light (ES!
Energy)
263
Geothermal energy
Centerior Energy (Cleveland Electric
Illuminating Company, Toledo
Edison)
6
Commercial efficiency programs
Connecticut Light and Power
173
Commercial, industrial, and residential efficiency programs
Dayton Power and Light
4
Commercial and government efficiency programs
Minnesota Power
71
Commercial, industrial, and residential efficiency programs
Niagara Mohawk
894
Commercial, industrial, and residential efficiency programs
Wisconsin Public Power, Inc.
3
Commercial, industrial, and agricultural efficiency programs
Sierra Pacific
1,496
Geothermal energy
PSI Energy
41
Commercial, industrial, and residential efficiency programs
.
Otter Tail Power Company
132
Commercial, industrial, residential, and agricultural
.
efficiency programs; biomass energy
Rochester Gas and Electric
7
Commercial, industrial, and residential efficiency programs
New York State Electric and Gas
142
Commercial, industrial, and residential efficiency programs
Orange and Rockland
4.6
Commercial, industrial, and residential efficiency programs
Western Massachusetts Electric
30
Commercial, industrial, and residential efficiency programs
United Illuminating
47
Commercial, industrial, and residential efficiency programs
Cincinnati Gas and Electric
11
Commercial, industrial, and residential efficiency programs
Long Island Lighting Company
535
Commercial, industrial, and residential efficiency programs
Consolidated Edison
1,854
Commercial and residential efficiency programs
Ohio Edison
131
Commercial, industrial, and residential efficiency programs
.
Southern California Edison
3,251
Commercial industrial residential and agricultural
.
efficiency programs
Total Allowances
12,816

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N ew Acid Rain Publications
S Human Health Benefits from Sulfate Reductions Under Title IV of the
1990 Clean Air Act Amendments (December 1995) — This report finds that
by the year 2010, when the Acid Rain Program is fully implemented, the
estimated annual health benefits from sulfate reductions will be $12 to $40
billion or more, dwarfing the cost of the program.
• Acid Rain Program Emissions Scorecard 1994, EPA 4301R-95 -012,
(December 1995) — This report examines SO 2 , NO, , Heat Input and CO 2
emissions trends for the original 263 Phase I units.
• Acid Deposition Standard Feasibility Study Report to Congress, EPA 430/
R-95-OOla, (October 1995) — This study concludes that SO 2 emissions
reductions will benefit sensitive surface waters, particularly in the eastern
U.S., and that the 502 trading program, which is expected to reduce costs of
control by 50 percent, will not have detrimental environmental effects. The
study also finds that NO emissions may play a larger role than was originally
believed in the acidification of sensitive lakes and streams.
• Annual Reconciliation Fact Sheet, EPA 430/F-95-118, (September
1995) — This fact sheet focuses on the process of Annual Reconciliation of
emissions and allowance holdings for the first year of the Acid Rain Prograib
(1995).
• Nitrogen Oxides Emission Reduction Program Proposed Rule for Phase II,
Group 1 and Group 2 Boilers (January 1996) — This proposal would
implement the second stage of the N0 Reduction Program by establishing
NO emission limitations for certain coal-fired utility units and by revising
N0 emission limitations for others.
• Conservation Verificatthn Protocols, Version 2.0, EPA 430/B-95-012, (July
1995) — This document offers a method that utilities may use to verify energy
efficiency savings under the conservation incentives of the Acid Rain Program.
For copies of these and other Acid Rain Program documents, please call the
Hotline at 202-233-9620.
A

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Dise ia imer of Endorsement
Reference to any pecUic comineretal products, process, or service by trade
name, .radtmark manufacturer, or otherwise does not constitute or imp ly
its endorsement, recommendation or favoring by the EPA

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SECTION I
CONFIDENTIAL STATIONARY SOURCE
MEMORANDA AND GUIDANCE
NOTE: THE FOLLOWING MATERIALS ARE CONFIDENTIAL
AND CANNOT BE COPIED FOR OR RELEASED TO
THE PUBLIC

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1
$YCa at
SECTION I DOCUMENT 1
Final Lists of Nationally Significant Clean Air Act Issues and
Categoric Opt Out Cases, with cover memo. These Air specific
materials, which supplement the general OECA/Regional rede-
legations procedures at Section A, No. 17 above, are
confidential and cannot be released to the public.
11/03/94

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
X lIA
WASHINGTON, D.C. 20460
NOV 3 1994
- OFFICE OF
ENFORCEMENT AND
COMPLIANCE ASSURANCE
MEMORPNDUM
SUBJECT: Final Lists of Nationally Significant Clean
Air Act Issues and Categoric Opt Out Cases
FROM: c - Kathie A. Stein,
/) Air Enforcement Division
TO: Regional Counsel, Regions I - X
Regional Counsel Air Branch Chiefs, Regions I - X
Regional Air Division Directors, Regions I — X
Regional Air Compliance Branch and Section Chiefs,
Regions I - X
I. INTRODUCTION
Attached for your use are the final versions of the
nationally significant Clean Air Act (“CAA”) issues list and the
list of CAA categoric opt out cases. These lists will help
implement Steven Herman’s July 11, 1994 Redelegations Memorandum
with regard to Clean Air Act enforcement cases. I would like to
thank the many Regional managers and staff in both the Office of
Regional Counsel and the Air Divisions for their comments on
these lists. Many of the comments, particularly regarding
nationally significant issues, were adopted; major comments that
were not adopted are discussed below.
To help put these lists in context, I am providing a brief
overview of our general plan for implementing the redelegations.
To keep our implementation as simple as possible, we will use the
general ORE/Regional procedures for det rmining AED’s formal
involvement in enforcement cases without making any Air-specific
changes to the procedures.’ These procedures, entitled “Outline
of General Procedures for Regional Enforcement Case Delegation”
Note that throughout this memorandum and attachments,
“involvement” in cases by the Air Enforcement Division (“AED”),
the Office of Regulatory Enforcement (“ORE”) or ‘OECA refers only
to AED, ORE or OECA’s formal role in enforcement case management,
not to informal communications regarding cases, or to activities
of other CECA offices, e.g., the Office of Compliance, or other
EPA offices, e.g., the Office of General Counsel.
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(“general procedures”), are attached to the general package which
trari smitted this memorandum.
0 Current Judicial Cases. The AED Air Branch Chiefs have
already discussed the current CAA civil judicial docket with
the Regional Counsel Air Branch Chiefs; together they
identified nationally significant cases that will continue
to have AED involvement. (These discussions also helped
generate the CAA nationally significant issues list.) In
accordance with the general procedures, these decisions will
be memorialized by letters from the AED Division Director to
the various Regional Counsel.
o Future Judicial Cases. The CAA issues list, together
with the general Redelegations Memorandum guidelines (see
below), will be used by the Regions to identify nationally
significant issues in CAA cases. The general procedures
will be used by Regions and AED to determine the extent of
any AED involvement.
o Current Administrative Cases. As above, the CAA issues
list and general guidelines will be used to determine
nationally significant issues. A standard one—page form
(attached to the general procedures) will be used by the
Office of Regional Counsel to document these determinations,
and to inform and involve AED regarding any nationally
significant issues in the cases. We are asking Regions to
complete their current administrative docket review within
two months, by January 3, 1995.
o Future Administrative Cases. Same procedures as for
current administrative cases.
II. CAA NATIONALLY SIGNIFICM T ISSUES LIST
The CAA nationally significant issues list, which focuses on
precedential CAA legal and policy issues, will supplement the
Redelegations Memorandum’s general guidelines for identifying
nationally significant issues. In response to comments, both the
CAA issues list and the general guidelines are attached to this
memorandum for ease of use. Both lists should be consulted to
determine nationally significant CAA issues. The CAA—specific
list will be updated periodically to remove or add issues as
appropriate.
Many of the CAA list’s issues are framed as “first actions”
or “litigation” involving the issue. Many Regions asked for
clarification of these terms. Regarding “first actions,” we
generally mean the first actions nationwide that involve the
issue, rather than the first actions in each Region. Hopefully,
the first few such actions will firmly establish the legal or
policy precedent, and the need for formal AED involvement on

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subsequent actions will end. However, if the actions resulted in
unfavorable precedents, or were split, AED involvement would need
to continue until the nationally significant issue was reasonably
settled. Accordingly, we are not setting a definite number of
“first actions.” Instead, we will work closely with you to
determine when a legal or policy precedent is sufficiently -
established to warrant dropping the issue from the CAA list. We
think this approach, with its reliance on common sense,
flexibility- and mutual trust, accords well with the Redelegations
Memorandum and the new ORE/Regional relationship envisioned by
- it.
Regarding “litigation,” we generally mean when the issue is
actively raised by EPA (or the Department of Justice) or the
defendant/respondent in the course of an enforcement action,
e.g., in pre—filing negotiations, settlement negotiations,
discovery or pre—trial motions, or at trial or on appeal. We do
not generally mean situations where an issue might potentially
arise but so far has not. For example, one item on the CAA—
specific list is the “litigation of Paperwork Reduction Act
issues.” Although some CAA cases will present potential
Paperwork Reduction Act issues, Regions would not need to notify
AED unless the issues are actively raised during the litigation.
Of course, to provide as early warning as possible, Regions
should notify AED as soon as the issue is raised.
Several Regions commented that the list was rather long.
Although we strived to keep the list brief, the 1990 CAA
Amendments’ new statutory provisions and programs generated many
new precedential legal and policy issues that required inclusion.
One Region questioned the need for a CAA-specific list at all;
however, most Regional Counsel urged ORE to create media-specific
lists as a means of obtaining additional guidance on what
constituted nationally significant issues.
Finally, several Regions requested that we combine the CAA—
specific list with the Redelegation Memorandum’s general
guidelines. The general guidelines contain categories of
nationally significant issues —— for instance, cases or issues
that receive “significant political attention,” or that are
“potentially affected by ... emerging regulatory proposals or
evolving policy changes” —— that cannot be reduced to specific
CAA examples. Accordingly, at best we could have only reproduced
the general guidelines at the beginning of the CAA—specific list.
(This is what ORE-Toxics did —— the first part of their draft
list, entitled “General Factors,” is basically a restatement of
the guidelines.) Ultimately, we decided not to reproduce the
guidelines within our CAA—specific list, but put the two lists
back—to—back as an attachment to this memorandum for ease of use.

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III. CAA CATEGORIC OPT OUT CASES LIST
AED’s proposed list of categoric opt out cases received wide
Regional support, and several Regions suggested additional
categories of cases. 2 After careful consideration, we have
decided to go forward with the originally proposed categories, -
but not to add more categories at this time. By so doing, we are
not implying that cases in the additional suggested categories
would not be good candidates for opt outs. Instead, we are only
deciding that for the present such cases will continue to be
handled through the regular case—by-case opt out procedures.
Based on our mutual experience with the categoric and case—by—
case opt outs, we may revise the list to include additional
categoric opt outs.
The categoric opt out procedures are fully described in the
general procedures, but since they are somewhat different than
regular case-by—case opt outs, they are also summarized here.
Generally, the redelegations require Regions to notify ORE of
every judicial and administrative case over $500,000, even if the
case does not otherwise present nationally significant issues, at
which point the appropriate ORE Division Director can
affirmatively opt out of the case. The categoric opt outs will -
work a bit differently. For these categories of long—established
and familiar CAA enforcement cases, such as Asbestos NESHAP
demolition/renovation actions, AED will have already
affirmatively opted out unless a particular case presents a
separate nationally significant issue. Accordingly, a Region
will not need to notify ORE/AED of these cases unless the Region
identifies some separate nationally significant issue in a
particular case. Of course, because ORE/AED will not otherwise
receive formal notice regarding these cases, the Office of
Regional Counsel must provide adequate advance notice, through
avenues, such as the weekly Regional Counsel reports to the
Assistant Administrator, of subsequent significant developments
in the litigation (e.g., trial or settlement) and of significant
press or other public attention.
In anticipation of implementing the redelegations
procedures, including those pertaining to categoric opt outs,
AED did not review most fourth quarter judicial referrals that
would be subject to a categoric opt out. In particular, AED did
not review most referrals that fell into a opt out category, and
that, according to the Region’s statement in the referral’s
litigation report, did not contain a nationally significant or
2 The suggested additional categories included NSPS cases
involving straightforward work—practice violations, and NESHAP
cases (other than Asbestos NESHAP demolition/renovation cases,
which were already included) involving notice, recordkeepirig,
reporting or straightforward emissions violations.

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precedential issue. For such cases, AED sent the Regions
memoranda stating that AED was foregoing its review in
anticipation of the categoric opt outs. ‘Once the redelegation
procedures are in place and the OR Office Director has
redelegated his authority to opt out of non-nationally
significant cases to the AED Division Director, we will send
follow-up memoranda confirming our earlier action.
We very much look forward to working with you to implement
these redelegations procedures, and to usher in the new era of
ORE/Regional relations that they represent. In so doing, we all
can build on the general good relations and cooperative dealings
that AED and the Regions previously enjoyed to create an even
better working relationship, based always on flexibility, common
sense and mutual trust. Any questions regarding these procedures
should be directed to me, or the AED Branch Chiefs, Julie Domike
at 564—2285 and Ann Bailey at 564—2275, or to AED’s Senior
Counsel, Steven Viggiani, at 564—2002.
Attachments
cc: Steven Herman
Scott Fulton
Michael Stahl
Bob Van Heuvelen
Connie Musgrove
ORE Division Directors
Alan Eckert, 0CC
John Cruden, DOJ
Joel Gross, DOJ

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ATTACHMENT 1
November 1, 1994
LIST OF NATIONALLY SIGNIFICA2 T CLEAN AIR ACT ENFORCEMENT ISSUES
I. NAAQS (including SIPS, PSD, NSR)
1. PSD/NSR cases brought under CAA Section (a) (5) or (b) (3)
where EPA is taking action in the face of an inadequate state
permit, particularly where sources refuse to obtain the proper
PSD or NSR permit, e.g., A.M. General . (This situation could
also arise under CAA Sections 113(a) (1) or (b)(1), or 167.)
2. PSD/NSR cases where companies that have begun construction
without a permit have challenged or are likely to challenge EPA’S
issuance of a stop construction order, e.g., Chevron and Unocal .
3. Cases enforcing or relying on the NSR 1990 CAA Amendments
transition policies, e.g., General Electric or the Block Island
situation.
4. Cases involving the improper use of a state air director’s
discretion regarding CAA compliance or enforcement, e.g., Ford
Motor .
5. First actions 3 to enforce Regional Clean Air Incentives
Market (RECLAIM) emission caps or other novel economic incentive—
based regulations, including both liability and penalty
assessment issues.
6. First actions to enforce the NOx RACT regulations.
7. Litigation 4 of the CAA Section 113(a) notice requirement for
permit violations where defendant is challenging EPA’S authority
to bring a permit enforcement action for non-SIP violations
without prior notice.
“First actions” means the first actions nationwide that
involve the issue, rather than the first actions in each Region.
When a sufficient number of actions have established the relevant
legal or policy precedent, the issue will be removed from the
list.
‘ “Litigation” of an issue refers to when the issue is
actively raised by EPA (or the Department of Justice) or the
defendant/respondent in the course of an enforcement action,
e.g., in pre-filing negotiations, settlement negotiations,
discovery or pre-trial motions, or at trail or on appeal. It
does not generally mean situations where an issue might
potentially arise but so far has not.

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II. Air Toxics
8. Litigation involving the denial of Stthpart FF waiver
requests, e.g, the Monsanto case in Region V.
9. First actions to enforce CAA Section 112(r) regarding
prevention of accidental releases.
III. Enhanced Monitoring
10. First SIP, NSPS or NESHAP enforcement actions that rely on
data generated pursuant to the new enhanced monitoring
regulations (for Part 63 NESHAP actions, on new enhanced
monitoring requirements contained in individual rules), or where
the direct enforceability of an emissions limitation is at issue.
IV. Emissions Averaging
11. Enforcement of emissions averaging standards under the
Hazardous Organic NESHAP (HON) and the NOx portion of the acid
rain regulations, or other emissions averaging standards,
including both liability and penalty assessment issues.
V. Acid Rain/NOx
12. First actions to enforce acid rain provisions.
VI. Title V Permits
13. First actions involving permit-as-a—shield issues, including
application shields.
14. First actions involving operational flexibility issues.
15. First permit enforcement actions where defendants attempt to
limit reliance on enhanced or periodic monitoring or other
credible evidence because the permits contain other, specific
compliance testing methods.
16. First actions where defendants raise startup, shutdown or
malfunction as a defense.
VII. General Enforcement Provisions
17. Cases relying on the “any credible evidence” standard in CAA
Section 113(e) (1) where EPA is relying on non—traditional
evidence, e.g., non—reference test methods or continuous
emissions monitoring systems (CEMS) data where such data is not a
specified emissions compliance method; t. prove the duration of
alleged violations.

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18. Litigation of the “sufficient cause to violate” provision
set out in CAA Section 113(e)(1). /
19. First cases involving litigation of the presumption of
continuing violation set out in CAA Section 113(e) (2).
VIII. Penalties
20. Litigation (in this context, any briefing or argument before
a trial or appellate court) that involves a departure from the
“top—down” CAA penalty assessment analysis (i.e., starting with
statutory maximum, then mitigating as appropriate using statutory
f actors) adopted by the courts in U.S. v. Mactal Constr. Co.,
U.S. v. B&W, , and U.S. v. Midwest Suspension and Brake .
21. Litigation where defendant argues that SIP approval delays
should reduce or eliminate penalty assessments (i.e, General
Motors-type situations).
22. Litigation of statute of limitations issues raised by the
Co. v. Browner decision, as set out in the July 13, 1994 g-uidance
memorandum from CECA to the Regional Counsel.
23. Litigation of Paperwork Reduction Act issues.
IX. Administrative Enforcement.
24. First administrative cases where defendant attempts to argue
a substantive difference between the “per day of violation” for
administrative penalties (CAA S 113(d)) and “per day for each
violation” for civil judicial actions (CAA S 113(b)).
25. First administrative hearings involving field citations.
X. Miscellaneous
26. Enforcement cases involving pre-enforcement review of
administrative orders, e.g., Alisteel and Hilton Davis , or
notices of violations (NOVs), e.g., Alveska , where defendant has
challenged an administrative order or NOV in court before EPA has
filed an enforcement case.
27. Challenges to EPA’S authority to overfile a state
enforcement action.
28. Enforcement of synthetic minor permits issued pursuant to a
SIP prohibitory rule.
29. Actions involving the federal enforceability of minor source
permits, e.g., Marine Shale issues.

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30. First uses of CAA Section 303 imminent and substantial
endangerment authority. /
31. Litigation of the scope of CAA Section 307(a) subpoena
power.
32. Litigation involving EPA’S ability to use cOntractors to
perform inspections.
33. Litigation involving a defendant’s refusal to grant an EPA
inspector access to a facility, particularly where the inspector
had obtained a warrant. -
34. CAA citizen suits where the United States is considering
intervention (or has intervened) as a party.
35. CAA citizen suits that involve penalties paid into, or
directed to sources other than, the Section 304(g) penalty fund.
36. CAA citizen suits where the “past violations” language of
Section 304(a) (1) (where the source “is alleged to have violated
(if there is evidence that the violation has been repeated)”) is
litigated or appealed.

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From Steven Herman’s July 11, 1994 Redelegations Memorandum:
Guidelines for Identification of
Nationally Significant Cases or Issues
The following guidelines and examples set forth indicators
of national significance for purposes of determining -the
involvement of the Office of Enforcement and Compliance Assurance
in Regional enforcement cases, and the exercise of anS ’ case
settlement authorities delegated to Regional Counsels. These
guidelines should not, however, be the sole basis for any
determination regarding the presence of nationally significant
issues in an enforcement action; indeed, what is “nationally
significant” will necessarily reflect the current climate in
which the Agency carries out its mission. For example, matters
which would not ordinarily be nationally significant may become
such when they relate to statutory reauthorization or other
legislative developments. Regional Counsels are expected to
consult with the appropriate Office of Regulatory Enforcement
Division Director on any issues of national significance which
have been identified, yet do not otherwise fall within any of the
guidelines set forth below. These guidelines may be periodically
supplemented or revised to reflect additional indicia of national
significance, or to remove any iridicia listed below for which
Headquarters attention is no longer required.
xamples of case or issues which raise indicia of national
significance:
1) cases or issues that have precedential character
o Initial use of new authorities
o New use of existing authority
o Issue of first impression
o Unresolved policy, legal or technical issue
o Change in national policy or legal interpretation
o Applications of new technology
2) Cases or issues that rise to a level of national attention
or significant public interest
o significant citizen concern (especially significant
environmental justice issues)
o Significant political attention
o Major state/local government relationship issues
o Cases against municipalities -
• Major environmental or public health threat
o Shut down of a facility

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Continued from Steven Herman’s July 11, 1994 Redelegations Memorandum:
o International implications (e.g. trade, import
violations, Basel Convention)
o Major inter-agency implications, including federal
facilities
o Settlements involving cutting edge Supplemental
Environmental Projects
3) Cases or issues that are potentially affected by legislative
proposals under consideration, emerging regulatory
proposals, or evolving policy changes
(e.g. Clean Water Act reauthorization, municipal
incineration)
4) Case s that are multi-Regional
o Multi-Regional case against one company
o Multi-Regional initiative (e.g. geographic, sector,
pollutant, regulation)
5) Cases or issues that deviate from the national norm
o Deviation from established policy
o Deviation from established guidance
o Deviation from previous legal positions

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ATTACHMENT 2
November 1, 1994
LIST OP CLEAN AIR ACT CATEGORIC OPT OUT CASES
1. All Asbestos NESHAP demolition/renOvatiOn cases.
2. NSPS cases that involve only notice, recordkeeping or
reporting violations, or emission violations established by
performance tests or by continuous emissions monitoring systems
(CEMS) where the regulations specifically provide that CEMS data
is an emissions compliance method.
3. All Regional CFC cases, e.g., recycling, motor vehicle air
conditioners, non-essential products ban, and labeling cases.
4. Routine consent decree enforcement actions.
5. Collection actions..

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SECTION I DOCUMENT 2
Cover memo accompanying the Guidance on Choosing the
Appropriate Forum in Clean Air Act Stationary Source Civil
enforcement Actions, found at Section B, No. 20 above. The
cover memo is confidential and cannot be released to the
public
10/29/91
2

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S 4 ?
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
• 4 L pç rj t
OCT 29 199 1
MEMORANDUM
SUBJECT: Guidance on Choosing the Appropriate Forum in Clean Air
Act Stationary Source Civil Enforcement Actions
FROM: Michael S. Alushin
Enforcement Counsel -
Air Enforcement Division
John B. Rasni
Director
Stationary Source Compliance Division
TO: Addressees -
I. INTRODUCTION
This memorandum transmits the final Guidance on Choosing the
Appropriate Forum in Clean Air Act Stationary Source Civil
Enforcement Actions (“Guidance”), to be used for determining
whether an enforcement action is best pursued in the administrative
or the judicial forum. A draft of this Guidance was circulated to
the Regions in August, 1991. Regional comments were relatively
minor, and for the most part were adopted and incorporated in the
final Guidance. A discussion of the most significant comments
appears in Section IV below.
II. SUMMARY OF THE GUIDANCE
The Guidance consists of a number of factors that must be
considered in determining whether to bring a Clean Air Act (CAA)
civil enforcement action in the administrative or judicial forum.
The factors, which are each discussed in detail, include the two
statutory limitations on administrative actions: a $200,000 cap on
penalties sought, and a twelve month limitation on the oldest
alleged violation. Guidelines on the proper handling of multiple
and repeat violations have been greatly expanded in recognition of
their importance, particularly with regard to the $200,000
statutory cap. The remaining factors discussed are the need for
court-supervised injunctive relief, evidence of criminal violation,
extensive post-filing discovery, and new legal issues. Our goal
has been to preserve maximum Regional flexibility while at the same

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time clearly delineating a small number of fundamental case
selection requirements.
III. ADMINISTRATIVE CASE DEVELOPMENT
A vital element of our new administrative program is
administrative case development. Many of the Agency’s current
administrative enforcers in other media have stressed to us the
critical importance of investigating and developing administrative
actions to the fullest extent possible prior to the filing of the
administrative complaint. This case development, which can be
accomplished by various statutory tools such as CAA section 114
requests and the new section 307(a) subpoena power, is important
for several reasons.
First, an administrative action should be fully developed to
allow the Agency to plead a firm, accurate and defensible penalty
amount in the complaint. This amount, the preliminary deterrence
amount under the CAA Stationary Source Civil Penalty Policy, is
based on numerous factors. Information addressing each factor is
needed prior to filing in order to accurately calculate the pleaded
penalty amount.
Second, since one of the goals of the administrative program is
expedited enforcement proceedings, the Agency should minimize its
requests for post-filing discovery. This will both prevent the
Agency’s own requests from causing delay, and place the Agency in
a favorable position to resist defendants’ post-filing discovery
requests. Third, post-filing administrative discovery is much more
limited than discovery in judicial actions. Thus, where extensive
post-filing discovery and investigation is necessary, the Guidance
states that the Agency should generally proceed judicially where
broad discovery under the Federal Rules of Civil Procedure is
available.
One notable circumstance in which full pre—filing
administrative case development may not be possible is where the
oldest violation to be pled is already close to a year old (e.g.,
an asbestos NESHAP case obtained from a delegated State where the
alleged violations are already somewhat dated). The current policy
is to address administratively only those alleged violations dated
within twelve months of the filing of the administrative complaint.
Thus, a prospective administrative action containing violations
already close to twelve months old may need to be filed quickly in
order to keep the violations within the twelve month limit. 1
1 If the amount to be pled in such an action is near $200,000,
the Agency decision—maker may wish to consider whether the action
might be better filed in the judicial forum, to preserve a unitary
action if later investigation provides evidence of additional

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IV. RESPONSES TO SPECIFIC COMMENTS
1. Twelve Month Limit on First Alleged Date of Violation/
Meaning of the Phrase “Initiation of the Administrative Action.”
One Region argued vigorously that the CAA’s twelve month limit on
the first alleged date of violation should be tolled by the filing
of an NOV or FOV, rather than by the filing of an administrative
complaint. The argument turns on the interpretation of the
durational limit set out in CAA section 113 (d), which provides that
“ [ t]he Administrator’s authority under this paragraph [ i.e., the
authority to issue administrative penalty orders] shall be limited
to matters where ... the first alleged date of violation occurred
no more than 12 months prior to the initiation of the
administrative action” (emphasis added).
The threshold issue is whether the boldface phrase means only
the filing of an administrative complaint, or whether it could be
Construed to also include the issuance of a federal or State NOV. 2
But even assuming that the phrase could be legally construed to
include both administrative complaints and NOVs, the separate
•policy issue is whether it would be advisable for the Agency to
adopt this approach to tolling the durational limit (the “NOV
approach”), or whether the Agency should use only administrative
complaints for this purpose (the “administrative complaint
approach”).
For initial implementation of this program, we believe that the
best policy course is to adopt the administrative complaint
approach. After conducting a considerable amount of legal research
and consulting with many of the Regional Counsel and Air program
offices, we have concluded that using NOVS to toll the twelve month
limit would involve substantial legal risk. The NOV approach, if
broadly adopted, would be strenuously litigated by defendants.
This would significantly slow our administrative enforcement
program and leave in limbo all administrative penalties assessed in
actions that employed the NOV approach until federal court
opinion(s) resolved the matter. 3
violations. In contrast, if the administrative forum is chosen, a
separate new administrative action would be required to address any
subsequently discovered violations if their inclusion in the
previous action would exceed the $200,000 statutory cap.
2 If the latter approach were adopted, the Agency could file
an administrative complaint at any time subsequent to the issuance
of the NOV, subject only to general CAA and other statutes of
limitations on the filing of enforcement actions.
SSCD is reviewing with the Regions whether it would enhance
the program to use the NOV approach. If we should seek to use this
approach, the legal principle would be established through test

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Moreover, the administrative complaint approach helps ensure
that the CAA administrative enforcement actions will proceed
expeditiously. In most circumstances, the key to quick resolution
of these actions will be the expeditious filing of the Agency’s
administrative complaint and the defendant’s answer, which together
will provide a solid foundation for settlement. The NOV approach
would allow the Agency to delay the filing of an administrative
complaint for months or even years —— an undesirable, process—
slowing result.
In response to Regional concerns that a substantial number of
potential administrative enforcement actions would be time-barred
under the administrative complaint approach, the draft final
Revised Guidance on Significant Violators (SV), Timely and
Appropriate (T&A), and Federally Reportable State/EPA Enforcement
Responses for Significant Air Pollution Violators (SVs) (“SV/T&A
Guidance”) has been amended to allow enforcement actions that are
good candidates for administrative penalty action but which contain
violations that are in danger of becoming time-barred, to be moved
to the top of the priority list so that an administrative complaint
can be filed within the twelve month limit. 4 Moreover, after the
Agency has acquired some experience with using the administrative
complaint as the twelve month toll, we will consult with the
Department of Justice about extending the twelve month period for
any classes of actions that we can demonstrate to be routinely
time-barred under the administrative complaint approach.
If even after the amendment to the SV/T&A Guidance the
administrative complaint approach still effectively precludes a
substantial number of violations from being addressed in •an
administrative action, a judicial action, or in some cases a field
citation, will still be available to address the violations.
2. Flexibility Regarding Court-Supervised Injunctive Relief.
Several Regions argued that the draft Guidance, which stated that
court—supervised injunctive relief should be sought for complex or
capital-intensive compliance activities, was too restrictive.
Instead, these Regions urged this type of compliance activity be
made a discretionary factor, albeit a weighty one, in the decision
to seek court—supervised injunctive relief. Recognizing that
court—supervised injunctive relief may not always be necessary in
these situations, the Guidance has been amended to require the
injunctions “in most circumstances.” However, we expect that
cases selected in consultation with Headquarters.
Hopefully, the Regions and the States will be able to
further streamline their enforcement coordination in order to
reduce the number of potential administrative actions that would
run this immediate risk.

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court-supervised injunctions will be employed in all but
exceptional situations of this type.
3. Administrative Action for Penalties with Concurrent
Judicial Action for Injunctive Relief. One Regional commentator
requested that the “Need for Court-Supervised Injunctive Relief”
section of the Guidance be amended to permit the Agency to split an
enforcement action into an administrative action for penalties and
a judicial action to secure injunctive relief. We have declined to
follow this suggestion, since a unitary enforcement action, pursued
in either the administrative or judicial forum as appropriate, is
the most straightforward and effective enforcement method.
4. $200,000 Statutory Cap —— Per Action, Per Year, or Per
Violator. One Regional commentator asked for additional guidance
on whether the $200,000 statutory cap is per action, per year, or
per violator or violation. As set out in the new “Multiple and
Repeat Violations” section, the statutory cap is per enforcement
action.
V. CONCLUSION AND CONTACT PERSONS
We would like to thank the members of the Title VII
Administrative Penalty Workgroup and all the Regional personnel,
both in the Air Program Offices and in the Offices of Regional
counsel, who provided invaluable expertise and advice in preparing
this Guidance. For questions or comment, please contact Scott
Throwe of SSCD (FTS 398—8699) or Steven Viggiani of OE—Air (FTS
260—2842).
Attachment
Addressees:
Edward E. Reich, Acting Assistant Administrator
Office of Ennforceinent
William G. Rosenberg, Assistant Administrator
Office of Air and Radiation
Scott C. Fulton, Acting Deputy Assistant Administrator
Office of Enforcement
Michael Shapiro, Deputy Assistant Administrator
Office of Air and Radiation
John S. Seitz, Director
Office of Air Quality Planning and Standards
Frank N. Covington, Director
NEIC

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—6—
Bruce Rothrock, OCAPO
Robert Heiss, OCAPO
Jonathan Libber, OCAPO
Regional Administrators, Regions I - X
Regional Counsels, Regions I — X
Air Management Division Director
Region I
Air and Waste Management Division Director
Region II
Air, Toxics and Radiation Management Division Director
Region III
Air, Pesticides and Toxics Management Division Director
Region IV
Air and Radiation Division Director
Region V
Air, Pesticides and Toxics Division Director
Region VI
Air and Toxics Division Director
Regions VII, VIII, IX and X
John Cruden, Chief
Environmental Enforcement Section
U.S. Department of Justice
Bill Becker, STAPPA-ALAPCO

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SECTION I DOCUMENT 3
Memo accompanying the Interim Asbestos NESHAP
Enforcement Guidance--”Friable asbestos” 1% by Area or
Volume vs 1% by Weight, found at Section E, No. 6 above. This
memo is confidential and cannot be released to the public.
04/18/89
3

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
S WASHINOTON. 0.0. 20460
‘)? J.QlhI
s
ATTORNEY - CLI ENT PR IVI LE
MEMORANDUM
SUBJECT: Interim Asbestos NESHAP Enforcement Guidance -
“Friable a bestos” 1% by Area or Volume v1 .% by
. ‘ ‘
FROM: T • Hunt
Associate Enforcement Counsel
Air Enforcement Division OE
John S. S.itz Director ____ ___
Stationary Source Compi S Division
TO: Addressees
The purpos. of this memorandum is to inform you of a study
and methodology which should assist you in enforcing the asbestos
NESHAP wher, issue. ar. raised concerning the p.rcentage o
asbestos contained in samples used to support a case. This
methodology should be referenced until revisions to the asbestos
NESHAP ar. promulgated in final form, and should be used in
ongoing cases.
There is a discrepancy between th. current definition of the
term “friable asbestos” contained in the asbestos NESHAP
regulations, at 40 C.F.R. Section 61.141 (“. . . material
containing mors than one percent asbestos by v.iaht . . .“), and
the test results produced by polarized light microscopy (PLM),
the method most frequently used by microscopists in the United
States when conducting asbestos bulk sample analyses.
Specifically, PLM results in a percentage measurement by area or
volume using the point counting or visual estimation method of
quantification. ( g Purpi. Book). Proposed revisions to the
asbestas WEAP wer, published at 54 Fed. Req. 912, on January
10, l9$$ which express the percentag. in the definition of
“Friabis asbsstos at 40 C.F.R. 61.141 as a percentage by “area”.
This amsI snt, when promulgated, will conform th. regulatory
definition of friabl, asbestos to the prevailing analytical
methods.
The intent of the 1% requirement is to ensur. broad coverage
of the asbestos NESHAP to include all cases where the regulat:ry
threshold amount of asbestos is present, and is not intended to
prescribe an exclusive analytical approach to establishing t e
presence of asbestos. Furthermore, most knowledgeable

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Interim Asbestos NESHAP Enforcement Guidance -
“Friable asbestos” 1% by Area or Volume vs. 1% by Weight
(04/18/89)
The memorandum portion of this document, signed by Terrell E.
Hunt, Associate Enforcement Counsel for Air Enforcement and John
S. Seitz, Director of the Stationary Source Compliance Division,
is confidential and cannot be released to the public. The
attachment to the memorandum is releasable and is attached -
hereto.

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X 2C46C
Toxic Sups ar*CeS
Asbestos Content In BuI
Insulation Samples:
Visual E timates and
Weight omposition

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—2—
technicians consider that weight and area or volume percentages
are equivalent for asbestos samples. Defendants may, however,
try to defend against our use of asbestos bulk sample lab
analyses where the percentage is not expressed by weight. We
should, therefore, be prepared to mak. an additional showing in
our cases of a correlation between percentages by weight and
percentages by area or by volume.
To facilitate this analysis, we have attached a peer-
reviewed study, entitled “Asbectos Content in Bulk Insulation
Samples,” which reflects the work of a nu.mbr of Agency and
outside experts who examined this issue during the past year.
The study confirms the general tenet that percentage by weight
and area or volume ar. roughly equivalent and provides assistance
in converting area or volume measurements to weight measurements.
Whenever the issue is raised by defendant, we suggest that the
procedures in this study be used to demonstrate the correlation
between weight and area or volume measurements. Additionally, we
recommend that this analysis be performed and included in the
litigation report in all cases where samples contain less than
10% by area or volume. We intend this purely as a precaution and
are riot establishing a regulatory trigger for further analysis.
If you have any questions concerning this study and
procedure, please contact OEcM-kir attorneys Rachel 14. Hopp (FTS-
382-2859) or Charles Garlow (FTS—475—7088), or Ken Malmberg in
SSCD (FrS—382—2870).
Attachment
Addressees: Regional Counsels
Regions I-X
Air Division Directors
Regions I-X
Air Compliance Branch chiefs
Regions I-X
Asbestos NESHAP Coordinators
R.qions I-X
Jack Farmer, Director
Emission Standards Divisioft, OAQPS
David T. Buente, chief
Environmental Enforcement Section, DOJ

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SECTION I DOCUMENT 4
Attachment Ito the Enforcement of National Emissions
Standard for Vinyl Chloride, found at Section E, No. 14 above.
This attachment is confidential and cannot be released to the
public.
06/28/83
4

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TECHNICAL EVALUATION OF VINYL CHLORIDE DISCHARGE REPORTS
FOR
SECTION I — VINYL CHLORIDE DISCHARGES IN VIOLATION OF 40 CFR 61.65 (a)
INC! ENT : 1
DATE: 4-28-77 -
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS): 120
SOLJ CE OF DISCHARGE: RELIEF VALVE 6Q24 ON VCM PRODUCT FILTER
DE RMINATION: PREVENTABLE
REPORTED CAUSE OF DISCHARGE MEASURES TO PREVENT DISCHARGE
OPERATOR ERROR. The relief valve (1)
discharge occurred from the VCM
product filter when, after com-
pletion of VCM product loading to a
rail tank car, the liquid—full vinyl
chloride tank car loading line and
filter were blocked in. The relief
valve discharged when the isolated
line underwent hydrostatic condi-
tions. ‘s response to the
Section 114 letter indicates that
the operator responsible for the tank
ar loading area failed to follow the
,oper operating procedures and thus
,solated a static line of liquid vinyl
chloride. Additionally, during the
plant visit on November 17, 1982,
Indicated that the operators were verbally
warned during their training period on
the dangers of blocking in a liquid—
full VCM line.
CO FED NTIAL
ATTACHMENT I 111/
PLANT
Revise operating procedures
and operator training program
to ensure that all liquid—full
vinyl chloride lines and fil-
ters are not Inadvertently
blocked In.

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SELI iON 11 - VINYL CHLORIDE DISCHARGE NOT SUBJECT TO NATIONAL EMiSSION
STANDARD FOR VINYL CHLORIDE
INCIDENT : 11
‘ATE: 8-10—79
;TIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS): 3,400
URCE OF DISCHARGE: RELIEF VALVE ON RAIL TANK CAR UTLX 95554
TERMINATION: NOT APPLICABLE
REPORTED CAUSE OF DISCHARGE
The r lfef valve discharge
occurred from the rail tank
car when, during loading
operations, the rail tank car
was overfilled. The discharge
was caused by a malfunctioning
set point fill meter which re-
sulted in an overfilled tank
car and the lifting of the tank
car relief valve. indi-
cates In their response to the
SectIon 114 letter that the
cause of the meter malfunction
could not be determined.
Additionally, in the plant
visit on November 17, 1982,
Indicated that the meters are
maintained on the basis of
bserved need. It was also In—
cated that the rail tank car
o a magnetic gauge to indicate
tne liquid level In the rail car.
It was the operator’s responsibility
to check the magnetic gauge during
filling operations. Thus, he should
have known If the device was operating
properly or not.
MEASURES TO PREVENT DISCHARGE
Rail tank cars are not subject
to 40 CFR 61, subpart F, of the
National Emission Standard for
Vinyl Chloride.
C T T AL

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REPORTED CAUSE OF DISCHARGE
The relief valve discharge occurred
from the VCM rundown sphere when,
during filling operations the-
sphe’re was overfilled.
indicates in their response to the
Section 114 letter that high pressure
and high level alarms were present
on the rundown sphere to warn the
operator of high liquid levels, but
neither functioned properly at the
time of discharge. During the plant
visit on November 17, 1982, —•
indicated that maintenance on the high
pressure and high level alarms was
performed on the basis of observed
need (this policy was changed to an
annual basis routine subsequent to
this discharge). Additionally,
indicated that operators, as a result
of their training, were required to
double check their instrumentation
indications against pumping rates
to the rundown sphere.
REPORTED CAUSE OF DISCHARGE
OPERATOR ERROR. The reliefs valve
discharge occurred from the HC1
stripping column during a startup
sequence which includes controlled
venting of inerts to a vent scrubber.
indicates in their response
to the Section 114’ letter that the
probable cause of the’ discharge WIS
either Inerts were not removed from
the HC1 column fast enough or the
the reaction rates In the cracking
furnace were increased at a faster
rate than the inerts could be re—
MEASURES TO PREVENT DISCHARGE
(1) Revise inspection/preventative
maintenance program to ensure
adequate and timely cali-
bration both of the high
pressure alarm and of the high
level alarm.
(2) Revise operating procedures
and operator training program
to ensure that operating
personnel determine vessel
liquid levels using all
available instrumentation
(including pumping rates to
rundown sphere) and double
check liquid levels when
inconsistent readings are
obtained.
MEASURES TO PREVENT DISCHAR I
(1) Revise operating procedures
and operator training program
to ensure that operators,
during startup of the VCM
purification system, maintain
control of the inerts present
in the system. This Includes
both controlling the reaction
rate In the cracking furnace
and purging inerts from the
HCI column in sufficient
quantities.
INCIDENT 2
DATE: I-6—77
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (IBS): 570
SOURCE OF DISCHARGE: RELIEF VALVE ON VCM RUNDOWN SPHERE V-6004A
DETERMINATiON: PREVENTABLE
INCIDENT : 3
D’ATE: 1—14—77
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARqED(LBS): 2,550
SOURCE OF DISCHARGE: RELIEF VALVE ON HC1 STRIPPING COLUMN C—6204
DETERMINATION: PREVENTABLE
a — .. r-ir . ,calI F\r4
L jf _ !, ;:-:_t\j 1.: li. iL
e’, I_.

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-.
of inerts in the MCi column reduced
the efficiency of the HC1 column con-
denser, resulting in underfiow of MCi
to the VCM column and ultimately to
the HC1 stripping column. In—
icates In the Section 114 letter
. sponse that the board operator
failed to take sufficient time to
remove all the inerts, even though
proper removal of inerts Is stressed
to aU operators when they are traIned. (3)
Additionally, indicated in the
plant ,vislt on November 17, 1982,
that pressure gauges existed on the
HC1 column, the quench column, and
by a comon vapor header) which should
have warned the operator of the high
pressure in the MCi column.
REPORTED CAUSE OF DISCHARGE
OPERATOR ERROR. The relief valve
discharge occurred from the V M
caustic treater. indicates
In their response to the Section 114
I etter that the discharge resulted
then both the caustic treater Inlet
and outlet block valves were left
closed. This caused the treater
to undergo hydrostatic conditions,
resulting in the relief valve dis-
charge. also indicates that
the operator responsible for the
caustic treater failed to follow
the proper operating procedures
and Isolated a vessel containing
liquid vinyl chloride.
stressing closer attention to
pressures present within the
VCM purification system and
faster response to bringing
the MCi column to a safe
condition (blocking in feed
to column, blocking in steam
to column reboiler) during
process excursions.
Improve process design by
installation of htgh pressure
alarm on HC1 column which
sounds in central control
room.
MEASURES TO PREVENT DISCHARGE
(1) This is the second incident
of process lines or vessels
being inadvertently blocked
in, resulting In a relief
valve discharge.
(2) Revise operating procedures
and operator training
program to ensure that all
liquid—full vinyl chloride
vessels are not inadvertently
blocked in.
(3) Improve process design by
installation of an equall—
2ation line which relieves
any high pressure build-
up back to an upstream
point ‘in the process line.
INCIDENT : 4
DATE: 5-15—77
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS): 90
SOURCE OF DISCHARGE: RELIEF VALVE 6231 ON CAUSTIC TREATER V—6209
DETERMINATION: PREVENTABLE
i b

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REPORTED CAUSE OF DISCHARGE
The elief valve discharge
occurred from the VCM column -
when, ‘as a result of a ccinplete
power failure to the VCN unit,
the cooling water pumps and the
propylene compressor shut down.
With no cooling water to control
the pressure in the VCM column,
the column pressure rose to the
point of the relief valve dis-
charging. Indicates in
their response to the Section 114
letter that the cause of the. power
failure was an incorrect switch—
over of power from a temporary
feeder to the normal feeder.
This tripped the circuit breaker
for the VCM unit. The incorrect
switchover developed when, having
installed capacitors in the circuit
as part of their own design, the
construction contractor failed to
emove the capacitor bank prior to
switching power feeders. This
resulted in an arc, knocking out
the power. indicated in the
Section 114 letter response that
- engineers were not aware that
the capacitors were In the circuit.
However, in the plant visit on
November 17, 1982, indIcates
that all departments affected by
any change to the manufacturing
process (such as the installation of
capacitors during the feeder switch-
over) were required to sign off on
any changes. Thus, engineers
should have been awape pt the
capacitors which wer e fnstalled in
the feeder circuit had standard
operating procedures been followed.
MEASURES TO PREVEF T DISCHARGE
(1) Revise operating procedures
to ensure that all affected
operating personnel are
aware of any proposè changes
to the manufacturing process
(including electrical power
supply) and that they com-
pletely analyze any potential
problems which may arise as a
consequence of the proposed
procedures.
(2) Improve process design by
utilization of a secondary
cooling water supply or a
secondary electrical power
source when primary elect-
rical power is lost to the
cooling water pumps and/or
the propylene compressor
In the VCM unit. This
iecondary power supply or
source of cooling water should
be sufficient to allow a safe
shutdown of the V M column
during disruption of the main
electrical power supply.
INCIDENT : 5
DATE: 5-23-77
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS): 3,000
SOURCE OF DISCHARGE: RELIEF VALVE 6209 ON VCM COLUMN C—6203
)ETERMINATION: PREVENTABLE
CDE1 ’ T P 1

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INCIDENT : 6
DATE: 6-14—77
ESTIMATED QUANTITY OF
SOURCE OF DISCHARGE:
DETERMINATION: PREVENTABLE
REPORTED CAUSE OF DISCHARGE
OPERATOR ERROR. The relief valve
discharge occurred from the VCII
rundpwn sphere when, as a result
of thç tank farm operator
neglecting to switct recirculating
va1 es, the VCM runJown sphere
was overfilled. This rundown
sphere, which was full at the time,
was overfilled when product from
the second rundown sphere (which
had just been put on recirculation
prior to lab analysis) was errone-
ously transferred to the first run-
down sphere. Indicates In
their response to the Section 114
letter that a high level alarm was
present on the rundown sphere, but
failed to activate properly (main-
tenance was performed on basis of
observed need). Additionally,
indicates that a high pressure
alarm did activate, but corrective
action could not be taken quickly
nough to prevent the relief valve
discharge. Finally, indicates
that the tank farm operator improperly
lined up the circulating valves con-
trary to proper operating procedures.
MEASURES TO PREVENT DISCHARGE
(1) This is the second incident of
a relief valve discharge due
to overfilling of, the VCM
rundown sphere because of
malfunctions of pressure
indicating andfor level
Indicating equipment.
(2) RevIse operating procedures
and operator training program
to ensure that all valves
involved in the transfer of
VCM to and from the VCM
rundown spheres are positioned
correctly at all times.
(3) Revise inspection/preventative
maintenance program to ensure
adequate and timely cali-
bration of the high level
alarms present on the VCM
.rundown spheres.

VINYL CHLORIDE DISCHARGED (IBS): 3,000
RELIEF VALVE 6008 ON VCM RUNDOWN SPHERE V-6004A

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1i L.IUtflt /
bATE: 10-24—77
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (IBS): 690
SOURCE OF DISCHARGE: RELIEF VALVE ON VCM RUNDOWN SPHERE V-6004A
DETERMINATION: PREVENTABLE
REPORTED CAUSE OF DISCHARGE
The relief valve discharge
occurred from the VCM rundown
sphere when, during filling
operations, the sphere was
ove filled. - indicates
in’their response to the Section
114 letter that high pressure
and high level alarms were
present on the rundown sphere
to warn the operator of high
liquid levels, but neither
functioned properly at the
time of the discharge.
Additionally, a level Indicator
which was present of the rundown
sphere also malfunctioned. During
the plant visit on November 17,
1982, indicated that It was
the responsibility of the tank
farm operator to be gauging the
rundown sphere and to be aware of
its liquid level at all times
(including comparing tank fill
rates to the indicated liquid
level).
INCIDENT : 8
DATE: )-30—78
ESTIMATED QUANTITY OF
SOURCE OF DISCHARGE:
REPORTED CAUSE OF DISCHARGE
The relief valve discharge
occurred from the.Vcjl tank
car loading line ‘and filter
when, after completion of
VOl product loading to a rail
tank car, the liquid—full vinyl
chloride tang car loading line
MEASURES TO PREVEUT DISCHARGE
(1) This is the third incident
of a relief valve discharge
due to overfilling of the VCM
rundown sphere because of mal—
functions in the pressure
indicating and/or level
indicating equipment.
(2) Revise inspection/preventative
maintenance program to ensure
adequate and timely calibra-
tion of all critical pressure
Indicating and/or level
Indicating equipment.
(3) Revise operating procedures
and operator training program
to ensure that operating
personnel determine vessel
liquid levels using all
available Instrumentation
(Including pumping rates
to rundown sphere) and double
check liquid levels when in-
consistent readings are
obtained.
12
LOADING LINE
HEASURES TO PREVENT DISCHARGE
(1) This is the second incident of
a relief valve discharge due
to isolating the VCM tank car
loading line and filter.
(2) Revise operating procedures
and operator training program
VINYL CHLORIDE DISCHARGED (LBS):
RELIEF VALVE 6024 ON VCM TANK CAR
AND FILTER
DETERMINATION: PREVENTABLE

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- ,IU 4$ .C1 CL 1St. IflC
relief valve discharged when the
isolated line underwent hydro-
static conditions. - Indi-
cates in their response to the
Section 114 letter that the
)perator responsible for the
ank car loading area failed
to follow the proper operating
procedures and thus Isolated a
static line of liquid vinyl
chloride. Additionally, -
Indicates that they recognized
pr1o to the relief valve
disc 4rge the need to reduce
the possibility of future vinyl
discharges in the tank car loading
area. Thus, they had begun an
engineering design on a closed
vent system which would route any
discharge from this relief valve
to two new storage spheres. During
the plant visit on November 17, 1982,
indicated that the engineering
design was needed, because they felt
human error could not be completely
eliminated by stressing proper
operator training and use of proper
equipment.
REPORTED CAUSE OF DISCHARGE
The relief valve discharge
occurred from the V I1 tank
car loading line and filter
when the nitrogen supply to
the emergency shutoff valves
was blocked In to allow a
contractor’s personnel to
weld on a nitrogen line.
The emergency shuto tf’yalves,
which control flow In the tank
car loading line and filter,
were nitrogen—actuated and were
designed to remain open when the
nitrogen supply was disrupted.
However, after the nitrogen
— UI C •$ 1. UI I $ •I I $ $
vinyl chloride lines and
filters are not inadvertently
blocked In.
(3) Improve process design by
Installation of a closed
relief system, whereby all
relief valve discharges are
vented to an applicable point
in the manufacturing process.
MEASURES TO PREVENT DISCHARGE
(1) ThIs is the third Incident
of a relief valve discharge
due to isolating the Y M
tank car loading line and
filter.
(2) Improve process design by In-
stallation of a closed relief
system, whereby all relief
valve discharges are vented to
an applicable point In the
manufacturing process.
INCIDENT : 9 -
NATE: 11—2—78
:STIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS): 12
JOURCE OF DISCHARGE: RELiEF VALVE 6024 ON VCM TANK CAR LOADING
LINE AND FILTER
DETERMINATION: PREVENTABLE
Though
process
was In the
of Installing such a
CO flDE T AL

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SuPply was b1ock d in. n trogeii
leaked around the block valve
(which on subsequent investiga-
tion was revealed to have mal-
functioned) which caused the
emergency shutoff valves to
close. This resulted In
isolation of a liquid—full
vinyl chloride line and the
creation of hydrostatic condi—-
tions in the line.
indicates in their response
to the Section 114 letter that
the nttrogen supply was blocked
in tb allow the contractor to
Install a closed vent hydrostatic
relief valve system on the tank
car loading line and filter.
INCIDENT : 10
DATE: 3-19-79
ESTIMATED QUANTITY OF
SOURCE CF D1SCHA GE:
DETERM I NATION:
REPORTED CAUSE OF DISCHARGE
The relief valve discharge
occurred from the VCM product
storage sphere when the in—
strument air supply valve to
the product storage sphere was
inadvertently closed. This valve,
which was accidently closed by
a tangled air hose when the
sphere was being painted,
supplies lnstrumsnt air to
allow functioning of both the
vent recovery system and
the high pressure alarm. The
relief valve discharged due to
high pressure In the sphere
( speculates that Inerts
must have been present In the
duration of time from the
first Incident of a relief
valve discharge from the tank
car loading line and filter
(which occurred on 4-28—77)
to the tine of this incident
was excessive. Thus, It is
i r. taterjal to the deter 1na—
tion (as to whether this
discharge could have been
prevented or not) whether
was in the process of
installing a closed relief
system at the tlhne of the
relief valve discharge.
(3) Revise inspection/preventative
maintenance program to ensure
that all critical valves are
maintained in a leak—free
state. This includes routine
replacement of any valve for
which it is not possible to
detect whether the valve is
leaking or not by some prac-
tical means.
MEASURES TO PREVENT DISCHARGE
(I) Improve process design
by utilization of a secon-
dary instrument air supply
to the product storage sphere
to ensure an adequate instru-
ment air supply to the vent
recovery system and the high
pressure alarm at all times.
(2) Revise operating procedures
end operator training program
to ensure that operating
personnel are aware of
pressures within the product
storage sphere at all times.
This includes using all
available Instrumentation
VINYL CHLORIDE DISCHARGED (LBS): 690
RELIEF VALVE ON VCM PRODUCT STORAGE
SPHERE V—6006A
PRE VE NTA3 i.E
CDt T Tt

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nign pressure s1tuat on), even
though the sphere was only 77%
‘run. indicates in their
response to the Section 114
letter that, to prevent a
recurrence of the Instrument
air valve accidently closing,
the valve was subsequently car—
sealed open. During the plant
visit on November 17, 1982,
Indicated that a locally-mounted
pressure indicator was present
on the product storage sphere.
INCIDENT : 11
REPORTED CAUSE OF DISCHARGE
The relief valve discharge
occurred from the VCM run-
down sphere when, during
filling operations, the sphere
was overfilled. Indicates
in their response to the Section
114 letter that a level indicator,
a high level alarm, a pressure
indicator, and a high pressure
alarm were all present on the
rundown sphere, but each mal-
functioned at the time of the
relief valve discharge. During
the plant visit on November 17,
1982, Indicated that they
estimate the level indicator
showed a constant 75% fuN
reading for approximately two
hours prior to the relief valve
discharge. . cpntends that
the operator sh6uld have noticed
that the level Indicator was
not functioning correctly during
this two hour period. Additionally,
indicated that the high level
and high pressure sensing equipment
pressure gauy u Uu Die
checking pressure indications
when Inconsistent readings are
obtained.
TO NATIONAL EMISSION
3,100
SPHERE V-6004B
MEASURES TO PREVENT DISCHARGE
(1) This is the fourth Incident
of a relief valve discharge
due to overfilling of the
YCK rundown sphere because
of malfunctions In the
pressure indicating and/or
level indicating equipment. -
(2) Revise inspection/pre-
ventative mai ntenance
program to ensure adequate
and timely calibration of
all critical pressure
indicati,ng and liquid level
indicating equipment.
(3) Revise operating procedures
and operator training
program to ensure that
operating personnel determine
vessel liquid levels using all
available instrumentation (in-
cluding pumping rates to run-
down sphere) and double check
liquid levels when Incon —
SEE SECTION II — VINYL CHLORIDE DISCHARGE NOT SUBJECT
STANDARD FOR VINYL CHLORIDE
INCIDENT : 12
DATE: 1-20-81
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS):
SOURCE OF DISCHARGE: RELIEF VALVE 6009 ON VCM RUNDOWN
DETERMINATION: PREVENTABLE
COE T L

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schedule (this was subsequently
changed to every three months after
this Incident), but was not
certain when the last maintenance
Qas performed on these pieces of
equipment. Finally, indicated
that the tank farm operator was
expected to determine the liquid
level In the rundown sphere based
o pumping rates to the sphere and
to use this Information to gauge the
accuracy of the level indicating devices.
INCIDENTe 13
DATE: 7-18-81
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS): 11,000
SOURCE OF DISCHARGE: RELIEF-VALVE ON VCM COLUMN C—6203
DETERMINATION: PREVENTABLE
REPORTED CAUSE OF DISCHARGE
The relief valve discharge
occurred from the VCM column
when, as a result of the loss
of cooling water to the VCM
column condensers, pressure
rose in the VCM column.
CoolThg water was lost due to
a total power outage In the
- area which
‘esulted in the shutdown of the
.ooling water pumps.
indicates In their response to
the Section 114 letter that the
shutdown of the cooling water
pumps was longer than necessary
when, after restoration of power
following the initial power outage
(estimated to have lasted 2—3
minutes), a simultaneous startup
of the cooling water pumps which
are large power consumers caused
an additional ten minute local
power outage. indicates
that the cooling water pumps
were designed to restart at ten
to fifteen second in tervals to
avoid a simultaneous startup.
At some time prior to the relief
valve discharge, the timing
sequence was Inadvertently
altered, such that the cooling
water pumps were set to restart
MEASURES TO PREVENT DISCHARGE
(1) ThIs Is the second incident of
a relief valve discharge re-
sulting from the loss of
power to the VCM column
condenser cooling water pumps.
(2) Improve process design by
utilization of a secondary
cooling water pump power
supply or a secondary source
of cooling water to ensure
an adequate supply of cooling
water to the YCH column con-
densers. This secondary
power supply or source of
cooling water should be
sufficient to allow a safe
shutdown of the VCM column
during disruption to the main
electrical power supply.
(3) Revise inspection/preventative
maintenance program to ensure
that the timing sequence
relays are properly maintained
and are set to ensure a
staggered startup of the
cooling water pumps after a
power outage.
CO F DEr\!TIAL
reauinys dr O..)La neo.

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- .“-.S— - -- —.
when the timing sequence had been
altered or by whom. In the plant
visit on November 17, 1982,
stated that they were not certain
whether the timing sequence relays
were part of any maintenance program
at the time of the relief valve
discharge. Subsequently, however,
a check of these relays was Insti-
tuted as part of the checkout
procedure performed during scheduled
shutdowns. also indicated that,
based on their process design for the
equipment In place, a loss of cooling
water for more than several minutes
will result In a relief valve discharge.
No equipment or procedures were present
at the time of the relief valve discharge
or since this time period to prevent the
occurrence of a relief valve discharge
with a loss of cooling water supply for
several minutes.
INCIDENT : 14
DAlE: ‘7—26-81
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS): 1,600
SOURCE OF DISCHARGE: RELIEF VALVE ON QUENCH COLUMN C—6201
DETERMINATION: PREVENTABLE
REPORTEDCAUSE OF DISCHARGE
OPERATOR ERROR. The relief
valve discharge occurred from
the quench column when, as a
result of refrigeration loss to
the HC1 column condensers due to
shutdown of the propylene coin—
pressor, pressure rose In the HC
column. This In turn caused
pressure to back up Into the
quench column, which Is connected
to the HC1 column by a comon
header, and resulted In a relief
valve discharge from the quench
column. indicates 1n their
response to th estIon 114 letter
that the relief valve discharge
resulted because of overfilling
of the propylene system prior to
startup. This overfifling created
a high pressure situation on the
discharge side of the propyl ne
MEASURES TO PREVENT DISCHARGE
(1) RevIse Inspection/preventative
maintenance program to ensure
adequate and timely main-
tenance on the high pressure
alarm on the propylene com-
pressor discharge line.
This includes ensuring that
the set point for the high
pressure alarm Is properly
positioned.
(2) Revise operating procedures
and operator training program
to ensure that operating
personnel do not overfill the
propylene system during
charging operations.
(3) Revise inspection/preventative
maintenance program to ensure
proper operation of all alarm
CO F T

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dU U4IIøLiC sriutCown or tne com-
pressor. The high pressure alarm
.on the discharge line of the
compressor failed to operate when
the alarm set point had been
improperly set above the shutdown
point. states that It is
unknown when the alarm point had
been improperly set (though, as
stated by in the plant visit
on Hovember 17, 1982, the alarm and
set point were scheduled to be
checked just prior to the relief
valve discharge, coincident with
the scheduled plant shutdown).
also stated during the plant
visit that the compress5r low
pressure alarm system, which is
supposed to activate under low
compressor outlet pressure, did not
sound after shutdown of the coin—
pressor. This was due to a design
flaw which was previously unde-
tected. Finally, stated
that operators were required to
use their experience and training
to ensure that the propylene
system was not overfilled.
critical after Initial in-
stallation of the alarm
system or after any design
modifications to determine
whether the system will
perform as designed under
actual operating conditions.
INCIDENT : 15
DATE: 7—31—81
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS):
SOURCE OF DISCHARGE: RELIEF VALVE ON YCH COLUMN C-6203
DETERMINATION: PREVENTABLE
REPORTED CAUSE OF DISCHARGE
OPERATOR ERROR. The relief valve
discharge occurred from the V 14
column during a startup sequence
which includes controlled venting
of inerts to a vent scrubber.
• indicates In their response
to the Section 114 letter that the
discharge resulted when Inerts present
in the system were not removed quickly
enough, thus causing reduced efficiency
of the HC1 colui’co densers. During
the plant visit on November 17, 1982.
Indicated that they believe
the operator attempted to operate the
cracking furnace at higher conversions
than the downstream process equipment
MEASURES TO PREVENT DISCHARGE
(1) This is the second
incident of a relief valve
discharge resulting from
Improper balance between
the cracking rate from the
furnace, and the removal of
Inerts fiom the MCi column.
(2) Revise operating procedures
and operator training program
to ensure that operators,
during startup of the VCM
purification system, maintain
control of the inerts present
In the system. This Includes
both cont oiiing the reaction
CO F D E1 T AL
14,000

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operator must operate the furnace,
maintaining a balance between the
cracking rate and the ability to
remove inerts from the HC1 column.
Failure to maintain this balance
leads to reduced cooling In the
HC1 column condensers which leads
to HC1 underfiow from the MCi column.
This in turns leads to reduced
cooling efficienc 4 es In the YCM
column which results in a pressure
bul1.d—up in the VCM column. If the
pressure build—up is great enough,
the reiief .alve will discharge.
and the purging of Inerts from
the MCi column in sufficient
quantities.
(3) Revise operating procedures
and operator training program,
stressing close attention to
pressures present within the
VCM purification system and
faster response to bringing
the MCi column to a safe
cc-dltion (blocking in feed
to column, blocking in steam
to column reboiler) during
process excursions.
INCIDENT : 16
DATE: 4-6-82
ESTIMATED QUANTITY OF VINYL CHLORIDE DISCHARGED (LBS):
SOURCE OF DISCHARGE: RELIEF VALVE ON VCM COLUMN C-6203
DETERMINATION: PREVENTABLE
REPORTED CAUSE OF DISCHARGE
The relief valve discharge
occurred from the VCM column
as a result of a sudden loss
of coolant to the VCM column
condensers. The coolant loss
1 was created by a total power
failure which was caused by a
tree limb falling across the
main feeder lines to the
facility. Indicates In
their response to the Section
114 letter that the under-
growth along the electrical
feeder right-of-way was not
properly maintained by
(owners of the
feeder system).
MEASURES TO PREVENT DISCHARGE
(1) This Is the third incident
of a relief valve discharge
resulting from the loss of
power to the VCM column
condenser cooling water pumps.
(2) Improve process design by
utilization of a secondary
cooling water pump power
supply or a secondary source
of cooling water to ensure an
adequate supply of cooling
water to the VCM column con-
densers. This secondary power
supply or source of cooling
water should be sufficient to
allow a safe shutdown of the
VCM column during disruption
to the main electrical power.
supply.
1,150

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SECTION I DOCUMENT 5
EPA Enforcement Authority with Respect to Sources Based on
a Finding of a State’s Failure to Comply with New Source
Requirements: The Effect of the 1990 Amendments — LEGAL
OPINION
The OGC legal opinion is confidential and cannot be released
to the public. 01/22/93
5

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.ç D ST4p
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C 20460
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—2—
Enforcement for a legal opinion addressing whether the amended
section provides authority to EPA to take nforcemeflt action,
based on a finding of state non-compliance, with respect to
sources subject to new source review requirements in attainment
areas, as well as sources in nonattainBient areas. The Office of
Enforcement also seeks advice on whether the Amendments affect
the proper parties to any enforcement action and the
circumstances in which an action may be brought. The Office of
Enforcement plans to issue revised enforcement guidelines with
respect to its authority under this section which will identify
the Agency position on the policy matters.
II. Backc roUnd -
There are two principal new source review programs under the
Clean Air Act calling for the preconstructiOn review and
permitting of major stationary sources and major modifications to
existing sources of air pollution. The nonattainment NSR
requirements in Part D of Title I apply in areas designated as
nonattaininent under section 107 of the Act, while the prevention
of significant deterioration (PSD) requirements under Part C
apply in all other areas.’
As with all SIP programs, Congress envisioned that states
would play the primary role in enforcing the nonattainment and
PSD new source review programs. See sections 101(a) (3),
i1O(a)(2)(C), 161, and l72(b)(5) of the Act. However, it is also
clear that Congress intended EPA to play an important oversight
and enforcement role. This intent is manifest in the numerous
and detailed federal enforcement provisions affecting NSR in
sections 167 and especially 113 that are discussed below.
EPA follows two general principles in reconciling the
tensions between the state and federal responsibilities in the
administration of NSR programs. First, it is the state that must
make the final decision on all issues relating to the specific
permit. There is no suggestion in the Act’s NSR provisions that
EPA has authority to second—guess the state on matters that are a
lawful and rational exercise of discretion properly conferred
upon the state. Second, and conversely, EPA is the agency with
Parts C and D were added to the Clean Air Act by the Clean
Air Act Amendments of 1977. In addition, the 1977 Amendments
revised section 110 (a) (2) (D) to require a rudimentary review of
any new source or modification without regard to size. This so—
called general or minor NSR program was revised again and
recodified as section 110(a) (2) (C) by the 1990 Amendments. It is
implemented by EPA regulations at 40 CFR 51.160-164 and the SIPS
of the various states. *
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—3-.
primary responsibility to interpret the federal law. In so
doing, EPA acts to ensure that the state exercises its discretion
within the bounds of the law and otherwise acts in accordance
with applicable statutory and regulatory norms. In carrying out
these principles, it is apparent that EPA acts largely as a
guarantor that the state follow applicable procedures and not act
arbitrarily or violate any objective standards that may apply,
while the state remains free to exercise informed judgment in
making the determinations. See Conference Report on Clean Air
Amendments of 1977, H.R. Rep. No. 95—564, 95th Cong., 1st Sess.,
reprinted in 3 Legislative History of the Clean Air Act
Amendments of 1977 ( Legislative History ) 533 (“The Administrator
shall issue orders and seek other action to prevent the issuance
of an improper permit.”); Senate Report No. 95—127, p. 31, 36
(1977), reprinted in 3 Legislative History 1405, 1410 (“The
decision regarding the actual implementation of best available
technology is a key one, and the committee places this
responsibility with the State, to be determined in a case-by—case
judgment.” (p. 1405), and “The committee intends a sharply
restricted role for the (EPA) in regard to implementing the
policy to prevent significant deterioration. EPA is limited to
• . seeking injunctive relief or other measures that would be
necessary to prevent the issuing of a permit for a new source if
it does not comply with the requirements of the subsection.” (p.
1410)) 2
In implementing these principles, EPA must strike a balance
between infringing on state discretion, and preventing or
remedying unlawful permits. For example, EPA is authorized to
inquire into whether the state violated applicable procedures or
acted arbitrarily in reaching its decision on lowest achievable
emission rate (LAER) under section 173(2), such as by ignoring
SIP limits in other states that are more stringent than the
limits reflected in the permit in question. On the other hand,
in the case of a decision applying best available control
technology (BACT) under section 165 (a) (4) for PSD, if a state has
met all procedural norms, considered all available control
technologies, and given a reasoned justification of the basis for
its decision, EPA has no grounds on which to challenge a final
substantive state decision that does not violate such objective
standards. These principles and the demarcations of EPA’s
enforcement authority have been set out in EPA’S approval of
state PSD programs, see, e. g. , 57 Fed. Reg. 28093, 28095 (1992)
2 The Legislative History specifically discussed the
permit program for PSD. There is no reason to believe that the
discussion is not also fully applicable to the NSR permit program
in nonattainment areas enacted at the same time.
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—4—
and in enforcement guidance, Memorandum , “Procedures for EPA to
address Deficient New Source Permits Undei the Clean, Air Act,”
from Michael S. Alushin, Associate Enforcement Counsel for Air,
and John S. Seitz, Director, Stationary Source Compliance
Division (July 15, 1988) (“Deficient Permit Guidance”).
II. Applicability of Section 113(a) (5) to New Source Review .
A. The 1977 Act .
Section 113(a) (5), as enacted in 1977, provided:
Whenever, on the basis of information available to him,
the Administrator finds that a State is not
acting in compliance with any requirement of
the regulation referred to in section
129 (a) (1) of the Clean Air Act Amendments of
1977 (relating to certain interpretative
regulations) or any plan provisions required
under section 7410(a) (2) (I) of this title and
part D of this subchapter, he may issue an
order prohibiting the construction or
modification of any major stationary source
in any area to which such provisions apply or
he may bring a civil action under subsection
( b) (5) of this section . (Emphasis added).
Under section 113(a) (5) as it appeared in the 1977
Amendments, the 95th Congress authorized EPA both to issue
general construction bans or to take enforcement action regarding
a specific source when EPA has made a finding that the State is
not acting in compliance with any requirements under Part D with
respect to the construction or modification of a major stationary
source. EPA’s construction ban authority under § 113 (a) (5) is
not, however, the focus of this memorandum. But See , 44
Fed. Req. 20372, 20380 (1979) (general preamble for approval of
SIPs under 1977 Amendments); 57 Fed. Reg. 13498, 13552, 13555—56
(general preamble for approval of SIPs under 1990
Amendments) (section 113 (a) (5) now authorizes construction bans in
attainment as well as nonattainment areas).
EPA has also interpreted section 113 (a) (5) to permit action
against a source to prevent construction or modification pursuant
to a specific state-approved NSR permit that, while arguably
valid on its face, EPA has found to be deficient in meeting the
applicable statutory or regulatory requirements.
Before the 1990 Amendments, EPA could challenge deficient
state—issued PSD permits in attainment areas under §S 113 (a) (1),
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—5—
113(b) (1) or 167 but not under section 113(a)(5). The scope of
EPA’s PSD enforcement authority under the ‘1977 Amendments is
addressed in only one reported decision, United States v. Solar
Turbines , 732 F.Supp. 535 (M.D. Pa. 1989). In that case, the
court held that sections 113(a) (1), (b)(1) and 167 did not
authorize EPA enforcement action solely against a source when the
source had been issued a state permit under Part C allowing the
construction or modification, unless the source had violated
“objective standards.”
Instead, the court found that EPA would have to take action
against the state where the source itself had violated no
“objective standards.” See , . at 539—40. According to the
court, action against the state to remedy permit deficiencies
could be taken under section 167, or in an enforcement-action
arising under section 113(a) (1), or, in a nonattainment area,
under section li.3(a)-(5). Id . at 537, 539—40 (citing United
States v. Ohio Department of Highway Safety , 635 F.2d 1195, 1203
(6th dr. 1980)). The court did not discuss whether enforcement
action could be brought against both the state and the source for
a violation of the provisions. EPA has stated, with respect to
that decision, that if a state—issued permit does not conform to
the Act’s PSD requirements, EPA will decide “whether to sue the
state and/or the source.” 55 Fed. Reg. 23547, 23548 (June 1].,
1990) (notice of clarification regarding approval of Kentucky’s
PSD program).
B. The 1990 Amendments .
The 1990 Amendments to section 113(a)(5) (Pub L. 101—549,
section 701) have given EPA enforcement authority with respect to
all new source review requirements, not solely those under Part D
and related provisions that are applicable only in designated
nonattaimnent areas. The revised language also refers to a
finding of noncompliance with “any requirement or prohibition of
the Act” relating to the construction or modification of new
sources, rather than with only a “plan provision” or other
specified provisions of the Act.
Section 113(a) (5) now provides:
The Sixth Circuit held that a state is subject to the
enforcement procedures of section 113(a) (1) as a “person” under
the Act when the state fails to perform a duty reasonably
required of the state under the implementation plan. In that
case, the state failed to deny registration to motor vehicles
that did not pass inspection and maintenance emission tests, as
required in the federally—promulgated provisions of the
implementation plan.
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—6--
Whenever, on the basis of available
information, the Administrator tinds that a
State is not acting in compliance with any
requirement or prohibition of the Act
relating to the construction of new sources
or the modification of existing sources, the
Administrator may --
( A ) issue an order prohibiting the
construction or modification of any major
stationary source in area to which such
requirement applies;
( B) issue an administrative penalty order in
accordance with subsection (d). or
( C ) bring a civil action under subsection
(b). (Emphasis added to indicate new
language.)
Judicial action to enforce section 113(a) (5) continues to be
authorized, as was the case under the 1977 Amendments, pursuant
to subsection (b) (3), as follows:
The Administrator shall, as appropriate, in
the case of any person that is the owner or
operator of . . a major emitting facility,
or a major stationary source . . . commence a
civil action for a permanent or’ temporary
injunction, or to assess and recover a civil
penalty of not more than $25,000 per day for
each violation, or both, -
(3) Whenever such person attempts to
construct or modify a major source in any
area with respect to which a finding under
subsection (a) (5) has been made.
By replacing the specific references to noncompliance with
section 129 (relating to the emissions offset interpretative
ruling in 40 CFR Part 51, Appendix S) and SIPS under Part D in
section 113(a) (5), as enacted in 1977, with references in the
1990 Amendments to noncompliance with new source review
requirements generally, Congress has provided EPA with authority
to prevent construction and modification of major sources in both
attainment and nonattainment areas based on a finding of a state
failure to comply with either statutory or regulatory
requirements.
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—7—
The legislative history of the 1990 Amendments makes clear
that the amended provisions of section ll’3(a) (5) were intended to
apply to new source review for PSD in attainment areas under Part
C, as well as to NSR in nonattainnient areas under Part D. The
House bill specifically referred to findings of noncompliance -
“with any requirement of Part C or Part D.” H.R. 3030, section
601. The House Committee Report also states with respect to the
provision that became section 113 (a) (5):
Failure to comply with Part C or Part D of title I - This
paragraph of subsection (á)\authorizes enforcement actions
where a State is not acting .n compliance with any
requirement of Part C or Part D of Title I. H.R. Rept. No.
101—490, Pt. 1, p. 391.
The extension of the 1990 Amendments to include PSD permits
in attainment areas within the scope of section 113(a) (5) makes
EPA enforcement action against these source appropriate to the
same extent as is the case when EPA finds that a state is not
acting in compliance with any requirements or prohibition of the
Act governing new sources in nonattainment areas. The court in
Solar Turbines recognized that EPA had enforcement authority to
take action against a source in a nonattainment area when a
finding had been made under section 113 (a) (5). The court stated
that EPA may take enforcement action “when after a finding has
been made that a State is not acting in compliance with the Act’s
fl attainment provisions, an owner/operator persists in
attempting to construct in violation of that finding.” 732 F.
Supp. at 537 (emphasis in original).
In discussing the related enforcement provisions in
section 113(b) of the final bill, Senators Chafee and Baucus, two
of the Senate Conference managers stated:
The agreement also adopts the House language making
clear that [ enforcement actions) can also be brought
whenever an owner or operator is attempting to construct or
modify a major stationary source in violation of new source
requirements. 136 cong. Record S 16950 (Oct. 27, 1990).
Thus, these Senate Conference managers agreed with the House
Committee Report that enforcement actions could be brought
against a specific source whenever a finding under subsection
(a) (5) had been made with respect to any new source requirement.
There is no contrary legislative history.
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—8—
Like the court in Solar Turbines , EPA has interpreted
section 113(a) (5), as enacted in 1977, to permit enforcement
action against a source with a state-issued permit based on a
finding of state failure to comply with the applicable
nonattaininent requirements.
The 1990 Amendments strengthen EPA’S position. As noted
above, section 113 (a) (5) as revised clarifies that enforcement
action may be based on a finding of state failure to comply with
“any requirement or prohibition” of the Act relating to new
sources, and not only failure to comply with “plan provisions” or
the Offset Ruling in 40 CFR Part 51, Appendix S. Congress has
thus clarified that a state failure to conform to the underlying
statutory requirements regarding new source review, as well as
state noncompliance with the terms of a SIP implementing those
requirements, may provide a basis for action under section
113(a)(5). This revision reaffirms that the underlying
Congressional concern is that new sources be constructed in
compliance with the statutory requirements, and not solely that
the source comply with the SIP plan provisions as interpreted and
applied by the state. Thus, where a state fails to submit timely
SIP revisions under the 1990 Amendments, EPA may use section
113 (a) (5) to insure that new source permitting by the state
conforms to the amended statutory requirements during the period
prior to adoption of revised implementation plan. See 57 Fed.
Reg. 13555—56.
III. Proper Parties in Actions Based on Section 113(a ,(5)
Findings .
As discussed below, the statute is clear that EPA may
maintain enforcement proceedings against a source under section
113(a)(5). The statute does not require that the state be joined
as a party in such proceedings. This is the position EPA has
taken in the past. Deficient Permit Guidelines, supra , p.8.
The 1990 Amendments do not contain any new provisions
bearing on the proper parties. Section 113(a) (5) and the related
enforcement provisions, as found in both the 1977 and 1990
Amendments, on their face contemplate the enforcement action
being brought against the source.
“ [ tihe Administrator shall, in the case of any person
which is the owner of an affected major source, . .
and may, in the case of any other person, commence a
civil action . .
(3) Whenever such person . . . attempts to
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—9—
construct or modify a major stationary source in any
area with respect to which a fir ding under subsection
(a)(5) has been made. (Emphasis added.)
This language leaves the Agency with discretion whether to
join the state as a party in an enforcement action against a
source based on a finding of a state failure to comply. As noted
above, enforcement action against the state has been found to be
permissible under other provisions of Title I. United States V.
Ohio Department of Highway Safety, supra; see also Solar
Turbines , 732 F. Supp. at 540. Although the statute plainly
allows EPA to proceed against a source as sole defendant as a
matter of law, it would be prudent to join the state as well in
most cases. This will prevent sources from asserting as an
equitable defense that EPA has failed to join a state that is the
“responsible” party because it issued the allegedly deficient
permit at issue.
The 1990 Amendments do not specify how the Administrator’s
finding of noncompliance by a state is to be made. EPA’s
Deficient Permit Guidelines provide a model Finding of Violation
to the state. The model Finding of Violation gives the basis fo
the finding of noncompliance, and a copy is provided to the state
and the source. Deficient Permit Guidance, Appendix 3. The
document states that it serves to provide an opportunity to
confer with EPA prior to initiation of civil action, but without
any waiver of EPA’s right to commence action immediately. Under
the EPA Deficient Permit Guidelines, section V. B., EPA is to
“keep the source informed of all EPA’s attempts to convince the
permitting agency to change the permit.” This policy is
important as a matter of equity in providing assurance that the
source is on notice of EPA’S position before any non—complying
permit is issued.
IV. Action Against Operating Sources .
The Office of Enforcement seeks advice on whether
enforcement action toiniplement section 113(a) (5) is limited to
sources that are being, or may soon be, constructed or modified,
or whether action may also be taken with respect to a source
already in operation. Section 113 (a) (5) states that the
Administrator may “issue an order prohibiting the construction or
modification” of any source. The related enforcement provisions
in section 113(b) (3), and (d)(l)(C), authorize action when a
- person “attempts to construct or modify a major stationary
source.” These provisions are focussed on construction in
progress or in the future, and might be read to exclude
enforcement against sources that have already begun operation.
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— 10 —
The better reading of section 113(a) (5) —— and certainly a
reasonable one —- is that EPA is not prec luded from taking
enforcement action simply because the source has been able to
commence construction, and even operation, before EPA has had a
chance to discover the violation and act upon it. This -
interpretation is supported by the legislative history of the
1990 Amendments. 5 Likewise, judicial enforcement action and
administrative penalties are not barred if, following EPA’s
comments during a state-permitting proceeding or issuance of a
Notice of Violation or administrative order, a source manages to
complete construction or modification and begin operation prior
to the filing of a civil action or commencement of an
administrative penalty proceeding. EPA’s existing guidelines
urge the Agency to act promptly upon the discovery of
noncompliance, and EPA has interpreted the provisions as allowing
enforcement action even if operations have started. See
Deficient Permit Guidelines, pp. 1, 2 and 4.
Given the underlying statutory purposes, this guidance is
proper. Section 113(a) (5) and the related provisions of section
1l3(a)(1), (b)(1), (b)(3) and section 167 are plainly intended to
grant EPA adequate enforcement authority to ensure that new or -
modified major stationary sources follow the new source review
requirements of the Act. That statutory purpose would be
undermined if new or modified sources were insulated from
compliance with the statutory requirements merely because EPA did
The Senate bill expressly provided for enforcement
against the operatio n of a non—complying source. S. 1630,
section 601(g). This provision was not included in the final
1990 Amendments, apparently because the agency was found to
already have appropriate authority. Senators Baucus and Chafee,
two of the Senate Conference managers, stated their view that the
intent of the Conference agreement was to:
preserve the current interpretation of the EPA that it
can prohibit the operation of a-source upon discovery
that such source is operating in violation of new
source requirements. Indeed, it is particularly
important that the EPA be allowed to take enforcement
action against operating sources that have circumvented
new source review requirements
We note that EPA has been judicious in the use of this
authority to date, and we would encourage the Agency to
continue to exercise its discretion with some restraint
in this area. 136 Cong. Record, S. 16951 (Oct. 27,
1990) (emphasis added).
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— 11 —
not discover and fully act upon such noncompliance prior to the
beginning of operations at the new or modi fied source. Moreover,
beginning operations does not cure the ongoing violation of the
underlying provisions of the Act and applicable regulations and
SIPs. That is, it does not change the fact that the ew source
or modification was constructed without a permit that conforms Eo
the requirements of the Act. As discussed above, those
provisions obligate states to issue, and sources to construct in
accordance with, new source review permits that conform to the
substantive and procedural requirements of the new source review
program. It is worth noting, however, that upon issuance of a
facially valid permit, substantial equities begin building on
behalf of the holder of that permit. Deficient Permit Guidance
at 2.6
6 Nany of the issues discussed in this memorandum were
addressed in a recent district court decision, United States v.
AM General Corp. , Civ. No. S87-00377 (N.D. md.), slip op. Dec.
14, 1992. In that case, the court upheld EPA’s position on
several points, but granted summary judgment for the defendant
based upon the timing of EPA’s claim. AM General involved an EPA
finding that a major stationary source had violated the Clean Air
Act by modifying its operations based upon a facially valid Part
D permit issued by the state that did not conform to the Act’s
NSR requirements. First, the court properly found that mere
possession of a facially valid permit does not shield the source
from enforcement action and that EPA has authority to bring an
enforcement case under section 113 without exhausting state
administrative or judicial remedies when a state issues a permit
that fails to conform to the Act’s requirements. AN General ,
slip op. at 15—16, 23. The court also found, however, that in
order to maintain such an action, EPA must as a matter of law
issue a finding of violation to the state alleging permit
deficiencies before the source constructs or modifies in reliance
on the state permit. Id . at 24—25. EPA believes this decision
was erroneous in certain key respects and has filed a motion for
reconsideration, which is pending. Regardless of the final
outcome, however, AM General suggests that EPA may want to
reconsider aspects of its NSR enforcement policy, as the case
underscores a pattern of judicial misunderstanding of those
policies. The staff of the Office of General Counsel would be
happy to assist in any such effort.
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SECTION J
CLEAN AIR ACT MOBILE SOURCE POLICIES
AND GUIDANCE
J
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1
Section J Document I
Interim Tampering Enforcement Policy (Mobile
Source Enforcement Memorandum No. IA)
06/25/74
5 a inaL
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(o
I UNrTED STATES ENVIRONMENTAL PROTECTION AGENCY
wAs.lGro4, D.C. 20460
I
4 , C.
44 It
Office of Enforcement and General Cot’nsel
June 25,_ 1974
Mobil. Sour’:. Enforcement Memorandum No. IA
SUBJECT: Interim Tampering Enforcs.eat Policy
A. Qfl
Th. purpos. of this Memorandum is to state the interim
policy of EPA with regard to enforcement of the ta.ipering”
prohibition--Section 203(a)(3)——of the Clean Air Act. This
Memorandum cancels and supersedes Mobil. Source Enforcament
Memorandum No. 1 of D.cemb.r 22, 1972.
1. Section 203(a) (3) of the Clean Air Act provides:
Th. following acts and the causing thereof are
prohibited-—
(3) for any person to remove or render inoperative
any device or element of design installed on or in
a motor vehicle or motor vehicle engine in compliance
with regulations under this title prior tc iti sale
and delivery to the ultimate purchaser, or for any
- manufacturer or dealer b ovingly to remove or render
inoperative any such device or element of design
after such sale and delivery to the ultimate
purchaser.’
Ssctjon 205 of the Act provides for a maximum civil penalty of
$10,000 for’ any person who violates Section 203(a) (3).
2. This ‘tampering’ provision of the law has created a
great deal of uncertainty, primarily among new vehicle dealer.
and automotive aftermarkst p rts manufacturers, regarding what
actions a.ndjor use of what parts are prohibited. The terms
“manufactt rer ’ and ‘dealer’ in 203(a) (3) refer only to motor
vehicle and engine manufacturers and new motor vehicle dealers;
however, the law impacts indirectly on aftermarket parts
manufacturers through it. applicability to vehicle dealers who
are customers for their products. Other provisions in the Act
establishing manufacturer warranties and authorizing compulsory
recall of properly maintained vehicles also have a potential for
anti-competitive effects in the aftersarket.
Aw a P c
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2
3. In general, it is clear that EPA ’s primary objective
in enforcing the statutory prohibitIon cn’”tampering” must be
to assure unimpaired emission control of motor vehIcles through-
out their useful life. It is EPA’s policy to attempt to achieve
this objectiv. without imposing unnecessary restraints on
commerce in the automotive aftermarket.
4. Th. long rang. solution to minimizing possibl, anti-.
competitive if fects that could result from implementation of -
these statutory previsions may lie in some type of certification
program for at least certain categories of aftermarket parts.
EPA is currently studying the_technical, administratjv. and
legal problems which such a prgram presints. EPA has yet to
develop the policy, proc.lures, or facilities attendant to any
long range solution.
5. In the absence of a long-term solution, and in ths
absenc, of proof that use of nonoriginal equipment parts will
adversely affect emissions, constraining dealers to the use of
only original equipment parts would constitute an unwarranted
burden on conerce in the automotive afterparket. Pending
development of a long range solution, the following statement
reflects EPA’s interim policy in the tampering area. This policy
ii intended to reduce the uncertainty which dealers now fac. by
providing criteria by which dealers can determine in advance
that certain of their acts do not constituts tampering.
6. New vehicle and engine manufactursrs have also requested
that they be treated, in their aftermarket part. role, similarly
to other aftermarket parts manufacturers. Memorandum No. 1 was
intended to avoid unnecessary adverse impacts en all aftermarket
manufacturers; this revision, therefore, makes it clear that
EPA’s interim policy extends to vehicle and engine manufacturers.
B. - Interim Policy
1. Unless and until otherwise stated, the Environmental
Protect ion. Agency will net regard the follovthg acts, when
performed by a dealer, to constitute violatioi s of Section
203(a) (3) of the Act:
(a) Use of a nonoriginal equipment aftsrzarket
part (including a rebuilt part) as a replace
msnt part solely for purposes of maintenance
according to the vehicle or engine sanufac-
turer’s instruction., or for repair or
replacement of a defective or worn out part,
if the dealer has a reasonable basis for
knowing that such use will net adversely
affect emissions performance; and
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3
(b) Use of a nonoriginal equipment aftermarket
part or system as an add—on, au xiliary,
augmenting, or secondary part or system,
it the dealer ha. a reasonabl, basis for
knov ng that such use will not adversely
affect emissions performance, and
(c) Adjusts ,nts or alterations of a parP iciilar
part or system parameter, if done or purposes
of maintenanc, or repair according to the
vehicl, or engine manufacturer’s instructions,
or if the dealer has a reasonable basis for
knowing that such adjustment or alteration
will not adversely affect emissions
performance. -
2. Forpurposes of clause (la), a reasonable basis for
knowing that a given act will not adversely affect emissions
performance exists if:
(a) the dealer reasonably believes that the
replacement part or rebuilt part is designed
to perform the same function with respect
to emission cot trol as the replaced part,
or
(b) the replacement part or rebuilt part is
represented in writing by the part manufacturer
to perform th. same function with respect to
emission control as the replaced part.
3. For purposes of clauses (ib) and (ic), a reasonable
basis for knowing that a given act viii not adversely affect
emissions performance exists if:
(a) the dealer knows of emiss tons tests v ich
have been performed according to testing
procedures prescribed in 40 CYR section U
shoving that the act does not cause similar
vehiclea or engines to fail to meet applicable
emission standards for their useful lives
(5 years or 50,000 miles in the case of
light -duty vehicles); or
(b) the part or system manufacturer represents
in writing that tests as described in (a)
have been performed with similar results;
or
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4
(C) a Federal, State or local envjron enta1
Control agency expressly represents that
a reasonable basis exists. (This provision
iS limited to the geographic area over
which the State or local agency has
jurisdiction).
4. For purposes Of cl&usea Cia), (lb),and (ic):
(a) except when necessarily done in Conjunction
with acts under 1(b) or 1(c) whjch EPA does
not consider to constitute violations of
Section 2O3(a)(3 , the permanent removal or
disconnecting or blocking of any part of the
original system installed primarily for the
purpos. of controlling emissions will be
presumed to adversely affect •mis ion
performance; and
(b) the proscription and appropriate publication
by EPA of an act as prohibited will be deemed
conclusive that such. act will adversely affect
emissions performance
C. DIscus ipn
1. Clause Cia) will apply to new or rebuilt rs lace2en
Pazts , protecting the dealer when he uses such a part to conduct
necessary maintenance ii a person familiar with the design and
function of motor vehicles and engines would reasonably believe
that such a part is designed to perform the same function as the
replaced part, or if there ii written representation by the parts
manufacturer that the part is so designed. Other reasonable
bases (e.g., emissions test showing no adverse effst) may •xist,
but these other bases will probably not occur often in the
replacement part context. If EPA gains informatic - .t certain
replacement parts do adversely affect emissions, a listing of
such :parts will be published.
2. Clause (lb) viii protect the dealer who installs add-on
pa if he ewi, or if it has been represented in writing to
him by the, part manufacturer, that emissions tests have been
performed according to Federal procedures iqhich show that such a
part will not cause similar vehicles to fail to mast appl cab1e
emission standards over the useful life of the vehicle. The
dealer is protected from prosecution even if the test results
have not been reported to EPA. However, the aftsrmarket parts
manufacturer who represents that such tests have been conducted
should have available the data from th. tests, including where,
when, how and by whom the tests were conducted should EPA request
it. Such add-on part. might be auxiliary fuel tanks, which would
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5
requir. evaporative emission control on light-duty vehicles to
the prescribed standard, or superchargers, which would require
emission testing showing conformance to standards over the useful
life of th. vehicle or engine. Clause (ib) willalso protect the
dealer who installs retrofit devices to reduce emissions at the
request of a State or local environmental control agency.
3. Clause (ic) applies to dealirs performing necessary
adluetmente or alterations, according to the vehicle or engine
manufacturer’s instruction., of parts already on th. vehicle or
engine, e.g., adjustment of the carbuetor or ignition timing.
It also covers adjustments or alterations, as in the case of
altitude “fixes”, if a “reasonable basis” exists as described
above.
4. This interim policy provides general guidance to dealers
as to those acts which do not constitute tampering and those acts
which may constitute tampering. It also allows afterurket parts
manufacturers an opportunity to protect their marksts by provi- -
ding dealers with assurance that their parts do not cause -
emissions standards to be exceeded. Vehicle and engine manu-
facturers also often function as aftermarket parts manufacturers.
For example, many vehicle and engine manufacturers provide
aftermarket parts for the in-u.. vehicle and engines of other
manufacturers as well as for their own in-use vehicle and
engines. In their aftermarket parts role, vehicle and engine
manufactursrs may take the same steps (set forth in this
memorandum) as parts manufacturers who are not also vehicl, or
engine manufacturers to provide dealers with atsurances that they
are not in violation section 203(a)(3). However, in their role
as vehicle or engine manufacturers, procedures exist whereby they
may obtain approval for any emission related change in a vehicle
or engine from its certified configuration or parameters (See
MSAPC Advisory Circular. No. 2-B “Field Fixes Related to Emission
Control-Related Components” and No. 16—2 “Approval of Emission
Contro) Mewiifications for High Altitude on Mew Light Duty Motor
Vehiclsj”, March 5, 1974). This Memorandum doss not relieve
vehicle o engine manufacturers from complying with the
procedures set forth in the advisory circulars except in their
specific tumctien as aftermarket parts manufacturers.
5. Any questions regarding this interim policy should be
addressed to the Mobile Source Enforcement Division (!G-240),
Office of Enforcement and General Counsel.
Norman D. Shulter, Director
Mobile Source Enforcement Division
Office of Enforcement and General Counsel
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Section J Document 2
Conduct of Settlement Negotiations
12/22/80
2
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UNITED STATES ENVIRONMENTAL PROTECflON AGENCY t /
WASHINGTON. D.C. 20460
DEC 2 2 98O
/ OFF1 OF ENFORCEMENT
MEMORANDUM
SUBJECT: Conduct of Settlement Negotiations
FROM: James J. Sakolosky, Chief,
In—Use Branch
TO: In—Use Branch Personnel
I. Introduction
This memorandum establishes Branch Policy concerning the
settlement of fuel cases under the Clean Air Act by attorneys
in the In—Use Branch. In particular, it will discuss the
basic strategy to be employed by field office enforcement
attorneys in the conduct of settlement negotiations, and the
extent to which various types of mitigation by the respondent
warrant a reduction in the proposed penalty amount.
II. General Settlement Policy
In general, a serious effort should be made to settle all
fuels cases. However, settlement should always be conducted
with an eye toward obtaining the most satisfactory results
possible from the viewpoint of the fuels program. In other
words, penalties should only be compromised when there is a
good reason, such as reasonable efforts to remedy the violative
circumstances or where there is a firm conitment toward an
innovative settlement, such as an approved public education
campaign. (See discussion below). In addition, if the proposed
penalty would. cause a respondent to go out of business or
would impose severe economic hardship, then mitigation will
generally be appropriate.
Always keep in mind that there are several principal
reasons for the Agency’s encouragement of prompt settlement.
First, it conserves our resources, since we are achieving
favorable dispositions of litigated, matters without going to
the lengthy processes of discovery, lining up witnesses, and
trial and post—trial memorandum and brief writing. In addition,
the time that would be spent in litigating these matters can
be devoted to other enforcement activities. Third, and related
to the first two, a binding settlement agreement and. resultant
final order wil]. result in a final disposition of a case
including mitigation, and institution of such programs as
public education, in a much shorter time than if resolved at
the trial by a presiding officer, and will generally eliminate
the possibility of appeals to the Administrator and the U.S.
Courts of Appeals.
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On the other hand, the attorney must keep in mind that
the Agency does not have a “settlement at any cost” policy.
A case should not be settled unless settlement is clearly
beneficial to the Agency. Dropping penalty amounts drastically
for the sole purpose of effectuating a prompt settlement is
improper. Such settlements could have adverse precedential
effect, and could lead respondents to believe that penalty
amounts can be reduced solely by bluffing the Agency with a
threat to go to trial. While we will always be willing to —
forego trial if a proper settlement could be achieved, we
must always be willing to go to trial rather than reach an
improper settlement.
One other fact that must always be kept in mind by the
attorney when conducting settlement negotiations is that the
attorney has no final authority to bind the Agency. The
settlement agreement is prepared for the signature of the
Deputy Assistant Administrator for Air, Noise and Radiation
Enforcement. Moreover, the Final Order or Consent Order must
be signed by the Administrator.
III. Prevaring for the Settlement Conference
While it may appear too obvious to bear repeating, the-
most important aspect of preparing for a settlement conference-
is a complete mastery of the file in the case, including all
relevant facts, and the appropriate sections of the statute
and the regulations. The enforcement attorney should have a
well prepared case file before him whenever discussing settlement,
whether by telephone or in person. Depending on the timing of
the settlement conference, the attorney’s file should include
such materials as those which would ordinarily be submitted at
the time of the prehearing conference, i.e., exhibits, documents,
witness list, etc. The attorney should also prepare strategy
for the actual conduct of the settlement conference. While
the strategy will often depend upon the nature of the particular
case, the attorney should try to outline his approach to such
matters as the type and extent of mitigation appropriate, the
degree to which the proposed penalty should be dropped as
various types of remedial and public information efforts are
agreed upon, and any other relevant matters. Enforcement
t.ben m e s 1 h hi .i r s.uper i5o end.. , in
paztJ i 1 r ly signi f “ asa.s th 1 e - r k ia ! a d2 r
division director, to confirm any decision regarding the
mitigation of the penalty.
IV. Conduct of the Settlement Conference
At this point it is appropriate to note that for many
cases it may be possible to conduct the settlement conference
by telephone. Even where an in—person settlement conference
may eventually be desired, a substantial portion of settlement
negotiations may still be conducted by telephone. Even a more
formal settlement conference can be arranged via telephone,
using the conference phone.
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In many cases this will be the only direct contact the
Respondent has with an agent of EPA. In some cases the Respondent
may be starting off with a negative impression of the Agency.
Whatever the circumstances, the EPA attorneys should be courteous
and convey an impression of reasonableness throughout the
settlement negotiations.
At the start of the settlement conference, the attorney
should explain that he has no authority to bind the Agency, nd
that final settlement can only be approved by the Administrator.
The approval procedure for settlement (signature by the respondent,
then the DAA and approval by the Administrator) should be explained.
Whether the settlement conference is conducted by telephone
or in—person, it is important for the EPA attorney to create
an impression of fairness, knowledgeability and well—preparedness.
The attorney must be firm in trying to achieve the best settlement
for the Agency, but at the same time give the impression of
being reasonable while listening to the respondent’s side
of the story.
In many cases, the fact of violation will be less of an
issue than the amount of the penalty proposed to be assessed.
In discussing the penalty proposed by the Agency, the attorney
should explain the considerations involved in reaching the
penalty and emphasize that the penalty figure proposed in the
complaint was reached pu.rsuant to a scheme published in the
Federal Register. The attorney should point out exactly how
the particular penalty amount being discussed was reached.
Eaving a copy of the Federal Register notice, and being able
to Doint to the appropriate section, helps alleviate any
charges that the penalty amount proposed in the particular
case was arbitrarily reached. The attorney should be prepared
to show the respondent how they fit into the particular size
of business category, and any other information that we
considered in proposing the penalty in the complaint.
Running through the entire circumstances of a particular
case, in sequence, and presenting all, evidence in its most positive
light, is the most effective means of demonstrating to the
respondent that its most rational decision is to settle the case
before the trial. The attorney should not hesitate to disclose
candidly a siwarv .o.f the ev4A n e C ns tktatii g ar
particular l y since such evidence would r ri 1 ly be “ - ng d
during a subsequent prehearing conference if the case is actually
set for hearing. The positive presentation by an attorney, in a
convincing manner, of a strong case against the respondent, will
underline the seriousness with which the violation is being
pursued by the Agency, and the difficulty of the respondent
succeeding at hearing.
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If significant efforts by the enforcement attorney to settle
a case are not fruitful, the attorney ShOUld try to emphasize,
in a non—threatening manner, that if settlement is not achieved
the attorney will be bound by the federal regulations to demand
the full amount of the proposed penalty at any hearing.
Moreover, many times in the course of settlement, it will appear
that the “bottom line” of the attorney is above the top amount
that the respondent appears to be willing to pay. In such
cases, where further reductions are not justified under any f
our mitigation policies, the attorney must be prepared to
adjourn the settlement conference and, in effect, say “see you
in court. .” While this technique should never be used by an
attorney unless he really means it, it can be an effective way
of calling a bluff of the respondent who simply does not want to
go to hearing.
Throughout the settlement conference the enforcement attorney
should be sure to elicit the specific facts regarding the efforts
taken by respondent to remedy the v .olatjon. Similarly, specific
proposals regarding future actions to be undertaken by respondent
should be discussed and agreed upon at the meeting. Near the
end of the settlement conference the specific actions agreed to
by the respondent (as wel]. as any specific actions or forbearance
agreed to by the enforcement attorney) should be identified to
ensure a unity of understanding between the parties.. The
enforcement attorney should summarize the agreement reached in a
memo to the file.
V. Mitigation of the Penalty Amount
The regulations provide for mitigation of the proposed penalty
amount under three different circumstances. First is action
taken to remedy the violation. Second is the ability to continue
in business and severe economic hardship. Third is “special
circumstances.” This memorandum will discuss each in turn.
A. Action Taken to Remedy the Violation
The regulations allow the Agency to mitigate the penalty
amount in the complaint by up to 40 %—that is, the penalty may
be reduced to as low as 60% of the amount proposed in the
ui laint npon a showing by the respondent that he is taking all
J JL J L i ste- t1T the - ffem ±oThti-
actions and to prevent future violations. It is important from
a negotiating perspective to always keep in mind that this 40%
reduction in penalty is the maximum that can be granted upon the
showing of complete remedial action. Thus, this figure should
never be the starting point for negotiations. Rather, absent
inability to continue in business or special circumstances it
should be the bottom line in most cases.
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Keep in mind that in some cases it is very difficult to
achieve complete remedial action. In such extreme cases where
completely effective remedial action is a practical impossibility,
less than complete remedial action may still justify a 40%
reduction of the penalty if the Respondent makes all reasonable
efforts to quickly remedy the violation and the condition which
caused the violation, and the respondent has initiated action to
insure that similar violations will not happen again. A.lways
put the burden on the respondent to show you that he has earned
full or partial mitigation. -
B. Ability to Continue in Business or Severe Economic
Hardship
If the respondent can show that the penalty as proposed or
as mitigated pursuant to criterion A may cause him to cease
business, or otherwise impose severe ecomonic hardship on his
business, he may be entitled to an unlimited adjustment of the
proposed penalty amount. Often in the course of negotiations,
the respondent will suggest that he is simply unable to pay the
penalty. At this point it is appropriate to inform the respondent
of the availability of this adjustment. The burden of proof
with respect to this adjustment is on the respondent. Inform
the respondent accordingly, and be prepared to discuss the type
of documentation necessary for him to meet his burden.
The type of documentation necessary to support financial
hardship mitigation is dependent upon the nature of the business
involved. For a publicly held corporation the most relevant
documents are the financial reports (i.e. the 10K reports filed
with the Securities and Exchange Commission) for the past three (3)
years, the financial projections for the year in which the
penalty will be paid, and the sources and uses of funds for that
year. In the case of a privately held corporation, the attorney
should request financial statements for the past three (3)
years (including balance sheets, income statement, and funds
flow statement), preferably audited, and a projection of income
and expenses for the year in which the penalty will be. paid.
If the financial statements are unaudited, they should be
supported by tax returns for the appropriate years. Finally,
small unincorporated businesses should supply tax returns for
the past three (3) years, whether individual or partnership
returns, and a statement indicating what expenses need be
paid in the penalty year (i.e. equipment needed, debts due,
etc.). Additionally, small busihesses should supply a list of
business—related assets to supplement the income statements. In
certain cases where it appears that the worth of a business has
been undervalued it may be necessary to r.equire the Respondent
to get an appraisal to substantiate its figures. Finally, it
should be noted that as a general rule the Agency is not interested
in the personal assets of the proprietors of an unincorporated
business which are not related to the operation from which the
offense stems. (The EPA’s Office of Economic Analysis is currently
preparing a booklet which will.discuss how to analyze ability
to pay penalties for all of above—mentioned entities).
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There are several aspects of this adjustment that are worth
discussing further. First, make sure that the documentation
submitted in support of this adjustment covers a period of at
least several years. A poor cash flow for several months will
ot support this adjustment. Second, keep in mind that, with
:he exception of some retailers, the gasoline supply industry is
generally a solvent one. Third, be wary ,of the multi—division
company, which can show a poor financial statement for the
particular division involved in the case, but which has substantial
income and assets outside the division which can be used to pay
the penalty. In such cases we will look to the financial
position of the entire corporation. Finally, keep in mind that
while the program has a very strong policy against forcing the
company to cease to continue in business or to suffer severe
economic hardship, the fact that a company is poor does not give
it license to continue to violate the Act. In other words, if a
company is a persistent violator and refuses to alter its violative
behavior even though it is within its capability to do so, it is
appropriate not to reduce the penalty even though the failure to
reduce the penalty may severely impact the company’s ability to
continue in business.
C. Special Circumstances
The penalty assessment guidelines allow for a reduction of
the penalty below the 60% level basically upon the showing that
the public interest would be best advanced by such an extraordinary
4justinent. Generally, this adjustment is made available where
e respondent undertakes certain—expenditures in furtherance of
ecific Agency objectives such as educating the public regarding
fuel. switching or when the respondent undertakes extraordinary
efforts to remedy the violation which. go beyond correcting the
specific. violations cited in the complaint. Examples of these
types of expenditures will, be discussed below.
There is no hard and fast rule regarding the amount of
mitigation which is appropriate in these cases. However, the
attorney should keep two things in mind. First, it will generally
take more than a $1 reduction of the penalty for each dollar
spent by the respondent in order to encourage the respondent to
undertake these activities. As a rule of thumb the attorney may
assume that mitigation at a rate of two dollars for each dollar
spent is reasonable, but this is not an inflexible guide.lthe
w1 ict must be applied. For placing EPA .posters in service station
windows, a reduction of $100 per service station, up to the 80%
limit, may be granted.
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Secor.dly, mitigation should generally be limited to 80% of
the initial proposed penalty (i.e. the final penalty should not
be less than 20% of the initial penalty). In general, the ultimate
criterion for reducing the penalty by 80% is whether, under the
circumstances of the case at issue the respondent is undertaking
the full scor,e of public education efforts which are reasonable,
given the penalty amäunt at stake and the nature of the business
(i.e. the opportunities available to provide public education
efforts). In certain extraordinary cases, even further mitigation
may become appropriate. For example, if the public information
effort is exceptional and involves the exoenditure of dollar-s
which exceed 60% of the essentially proposed penalty, mitigation
to zero may be appropriate. Ultimately, the enforcement attorney
should attempt to get as great a productive effort from the
respondent as possible in return for mitigation in this category,
considering the circumstances of the case. The attorney should
bear in mind that often times the respondent is in a better
position than the Agency to generate public awareness, and
should measure this benefit in deciding appropriate mitigation.
Special circumstances would also apply in those cases where
the investigation has indicated both fuels violations and tampering
violations. Where the respondent is willing to correct all
tampering violations, as a condition of the settlement of the
fuels case, he will be eligible for a special circumstances
mitigation credit. (This same principle can be applied to
provide a special circumstances mitigation in return for the
restoration of vehicles subjected to fuel switching violations
which were not specifically alleged in the comolaint.) As a
means of encouraging a respondent to perform these corrective
actions, it is proper to characterize the tampering violations
as actions on which referral to Justice has been delayed pending
resolution of the fuels case, i.e., if tampering problems are
not corrected in the course of the fuels settlement, respondent
may find himself in federal district court on the tampering
counts. The attorney should realizeS that this is not meant to
be used as a bluff — if the tampering incidents are not resolved
preparation of a litigation report will be necessary.
Special circumstances mitigation may also be appropriate
where the cost of remedial efforts is greater than 40% of the
unadjusted penalty. For example, rehabilitation of vehicles
where emission devices have been rendered i.nQperative due to
troduct-i n a.Lle ed in th coinpla mt hr n1 t he rr n i ti r d as
part of the mitigation down to 60% of the proposed penalty.
Eowever, as an incentive to achieve prompt rehabilitation of all
vehicles subjected to fuels and tampering violations, the cost
of rehabilitation may generally be applied as special circumstances
mitigation when the cost of restoration would exceed 40% of the
unadjusted penalty. This is consistent with the public interest
rationale of the special circumstances category. On the other
hand, if in the context of a contamination case a refiner were
to propose to implement a quality contro l and oversight program
to prevent future violations, and the total cost of such efforts
exceeded 40% of the assessed penalty, it would not be appropriate
to reduce the penalty below 60%.
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he refiner should have implemented such actions to assure
compliance in the past, and should not be allowed to benefit
because of delay.
The principal special circumstances efforts which we would
like to see undertaken by respondents are public information and
education efforts. Particularly in the case of a large company
or a municipality, state or governmental agency, a wide—spread
public education program may accomplish far more in terms of
reducing fuel switching than monetary penalties. Since such a
program can vary widely depending upon the nature of the respondent,
it is impossible to discuss every aspect of such a program in
this memorandum. Bowever, among the types of programs to be
encouraged are: massive mailing, either nationwide or within the
particular c mmunity, of EPA pamphlets concerning fuels to vehicle
owners and facilities subject to the fuels regulations; tax or
credit bills containing either inserts or messages imprinted on
the bill relating to the fuels program; advertising of a public
service nature by various media, such as radio, television,
newspapers, i agazines (such as Time, Newsweek, etc.), and highway
billboards; the use of bumperstickers or placards on fleet vehicles,
particularly taxicab fleets and off-plant fleets of large national
companies; the inclusion of EPA approved articles in company
magazines; the use of signs and or posters at places of business;
and the sponsorship of emission control system related training
programs for mechanics. Not all remedies will be available to
al]. respondents. There must be a determination that the Agency
is getting its money’s worth before such a reduction is granted.
VI. Timing of Finalization of Consent Acreement
Section 211 of the. Clean Air Act does not empower the adminis-
trator to subpoena withesses in connection with the fuels
regulations. Accordingly, the enforcement attorney must be
constantly aware that if either the Agency or any respondent
needs the testimony of a particular respondent (who is engaged
in settlement negotiations), the attorney must either: ].) keep
such respondent in the hearing process by not finalizing settlement
or 2) secure the agreement of such respondent to testify as part
of the consent agreement. It should be further noted that a
respondent cannot be compelled to testify in a given case even
though it is in the chain of distribution or otherwise factually
nvc.lv.ad £ 4
Thus, withholding finalization of the settlement agreement
may be necessary to motivate a respondent to testify in a case
in which it is technically uninvolved. Failure to provide for
the testimony of such a respondent could lead to dismissal of a
companion Agency case based on either insufficiency of evidence
or the failure of the Agency to provide a hearing satisfying due
process requirements with respect to the cross—examination of
adverse witnesses and the presentation of witnesses in one’s
defense.
—8—
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VII. Conclusion
These guidelines may change as time goes by, and as we learn
more about the settlement process and the types of mitigation
that best suits the program needs. Every enforcement attorney
should keep in mind that each settlement conference may take its
own unique course, and that the attorne should always attempt
to remain flexible, within limits. The attorney should always
try to devise new and innovative settlement techniques that will
further the overall objectives of the enforcement efforts, including
our efforts to better inform the public regarding mobile source
programs. In addition, the settlement process should be moved
forward expeditiously. The attorney should establish an overall
timeframe and specific milestones to assure that this occurs.
-9—
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Section J Document 3
Tampering Settlement Agreement Memo
06/27/85
3
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
L
27 1985
OFFICE F
AIR AND RADIATION
SUBJECT: Tampering Settlement Agreement Memo
FROM: Richard G. Kozlowski, Director
Field Operations nd Support Division
TERU: Marc R. Hilison, Chief
Investigation and Enforcement Branch
TO: Field Operations and Support Staff
RE: Use of Settlement Agreements in Tampering Cases
Effective immediately, routine cases arising under
203(a)(3) of the Clean Air Act, 42 U.S.C. 7522(a)(3),
may be settled pursuant to an agreement between the violator
and EPA without DOJ involvement. This includes cases where
NOV’s have already been issued and DOJ has been notified.
Such agreements will be executed for EPA by the Division
Director and shall be ‘in a format similar to that used for
cases arising under § 211 (sample attached). This “informal
settlement procedure can be used for all tampering cases
xcept the following:
1) Where the terms of the agreement would not
be fully performed within the statute of
limitations period (arguably, 5 years from
the date of the violation, i.e., the date
that the tampering occurred; not 5 years
from the date we detected the tampering)
or where the terms of the agreement are
not to be fully performed within a brief
period. Avoid agreements involving multiple
payments, especially where such payments
(or other performance) will drag out for
more than one year from the date of the
agreement;
2) Where the party is liable for a large number
of violations since judicially imposed injunctive
relief and eventual contempt of court proceedings
may be appropriate in such cases;
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—2—
3) Where there is good reason tp believe that the
party may default. It will be advantageous in
such cases to have the matter before the court
and to be able to provide for continuing court
jurisdiction.
In these cases a consent judgment package should be prepared
and forwarded to the Department of Justice.
The attached sample agreement provides a basic format
for tampering settlements. ‘The format follows the format
used in fuels cases, with differences logically following
from the different statutory language. For example, the
stipulated penalty provision in tampering settlements will
generally be the statutory penalty ($2,500 or $10,000 times
the number of violations). There is no reference to Nremit
or mitigateu.
Additional provisions may be included where appropriate.
However 1 make no reference to a iy actions that might be
taken by DOJ in event of default. Terms that may be appro-
priate include:
1) Compliance Provisions — e.g., that respondent
must correct any violations not already corrected.
This can be coupled with a requirement that
respondent post a performance bond, especially
where there are a large number of vehicles to be
repaired;
2) Monitoring provisions — e.g., A.ny authorized
representative or Contractor of EPA, upon
presentation of credentials, may enter upon the
premises of respondent at any time for the purpose
of monitoring compliance with this Settlement
Agreement. TM
General procedure for settlement of tampering cases is
as follows:
1) Prepare tampering NOV and forward for signature
of Division Director.
2) Determine if case would appropriately be settled
by the TM infornial M procedure outlined here or
by consent judgment. Make recommendation on
cover memo that goes with NOV.
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—3—
3) In either case, no letter of notice to DOJ
(Buente letter) will be require .
4) Begin negotiations. If proposed terms include
performance that will be drawn out (especially
if it will go beyond the Statute of Limitations),
a consent judgement should be prepared, as per
current procedures. Otherwise, (assuming
other circumstances are favorable for uinformalu
settlement agreement), prepare a settlemetit
agreement as per format and refer to Division
Director for signature.
Attac1ix it
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U. S. ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D. C.
FOSD Case No.
SETTLEMENT AGREEMENT
(hereafter uResponderitu).
)
In the Matter Of:
)
)
-
)
,
)
Respondent.
,, )
)
. .
THIS AGREEMENT is made and entered into by and between
the United States Environmental Protection Agency (hereafter
NEPAn) and
Preliminary Statement
1. On , 198 , a Notice of Violation
was issued to Respondent stating that on
198 , Respondent violated § 203 of the Clean Air Act, 42
u.s.c. § 7522. The Notice stated that at Respondent’s
facility located at ; Respondent
removed or rendered inoperative [ emission control devices] on
vehicles.
2. EPA proposed in the Notice a civil penalty of
dollars ($ ), hereafter
the statutory penalty TM . -
3. Respondent replied to the Notice and requested that
EPA reduce the statutory penalty.
4. The parties, desiring to settle and resolve this
matter, in consideration of the mutual covenants and agreements
contained herein, which consideration is acknowledged by the
parties to be adequate, agree as set forth herein.
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—2—
Terms of Agreement
5. The parties agree that the settlement of this matter
is in the public interest and that this Settlement Agreement -
is the most appropriate means of resolving the matter.
6. The parties stipulate and agree to the following
matters. It is further agreed that these stipulations are
applicable to this Agreement and any proceeding arising out
of this Agreement or the subject matter of this Agreement:
a. The repair facility (or other regulated party] located
at was owned and operated at all
relevant times by Respondent.
b. Respondent is engaged in the business of repairing
and servicing motor vehicles and motor vehicle engines.
c. On or before but subsequent to
August 7, 1977, Respondent removed or rendered inoperative
catalytic converters on vehicles following their sale to
and delivery to the ultimate purchaser.
d. A catalytic converter is an emission control device
within the meaning of section 203(a)(3)(b) of the Clean Air
Act, 42 U.S.C. S 7522(a)(3)(3).
e. Respondent is liable for the violations of
S 203(a)(3)(B) of the Clean Air Act, 42 U.S.C. S 7522(a)(3)(B).
f. Statement of correction of the violation(s).
g. Jurisdiction to settle this matter exists pursuant
to S 203 of the Clean Air Act, 42 U.S.C. S 7522, and
other provisions of law.
7. After considering the gravity of the violation(s),
Respondent’s history of compliance, the size of Respondent’s
business, Respondent’s actions to remedy the violation(s)
promptly, Respondent’s ability to continue in business, the
terms of this Agreement and other facts presented by Respondent,
EPA has agreed to conditionally reduce the potential civil
penalty to ________________ , pending successful completion
of the terms of this Agreement. Respondent agrees to pay
________________________ within sixty (60) days of the
date of this Agreement (the date the fully executed Agreement
is received by the Respondent as evidenced by the return
receipt) by cashier’s check or certified check payable to
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—3—
the TM United States of America” to the EPA Washington Accounting
Operations, P.O. Box 360277M, Pittsburgh, Pennsylvania 15251,
Attn: FOSD—XXXX. Each check must be identified by the FOSD
number ____ and Respondent’s name.
8. In addition to the civil penalty set forth in
paragraph 7 of this Settlement Agreement, Respondent agrees
to: (statement of other efforts and appropriate dollar amounts.
Be sure to leave out reference to being in the nature of a
civil penalty).
9. Attachments (if any) are hereby incorporated into this
Settlement Agreement by reference.
10. Respondent shall permanently refrain from removing
or rendering inoperative any device or element of design of
any motor vehicle that is designed to control exhaust emissions
from motor vehicles, and shall comply with the provisions of
section 203 of the Clean Air Act; 42 U.S.C. §7522.
11. Time is of the essence hereof. Upon failure to pay
or perform in a timely manner pursuant to paragraphs 7 or 8
of this Agreement, or upon default under or failure to comply
with any of the terms of this Agreement by Respondent, the
entire statutory civil penalty of shall be
immediately due and owing. The parties agree that upon such
default or failure to comply, EPA may commence an action to
enforce this Agreement or to recover the civil penalty pursuant
to §205 of the Clean Air Act; 42 U.S.C. §7524; or pursue
any other remedies available to it. Respondent specifically
agrees that in the event of such default or failure to comply,
EPA may proceed in an action based on the original claim of
violation of §203 of the Clean Air Act, 42 U.S.C. §7522,
and Respondent expressly waives his right to assert that
such action is barred by 28 U.S.C. §2462, other statutes of
limitation, or other provisions limiting actions as a result
of passage of time.
12. Respondent waives his rights, if any, to a hearing,
trial or any other proceeding on any issue of fact or law
relating to the matters consented to herein.
13. The terms of this Agreement are contractual and not
a mere recital. If any provision or provisions of this
Agreement are held to be invalid, illegal or unenforceable
the remaining provisions shall not in any way be affected or
impaired thereby.
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—4--
14. The validity, enforceability, and construction of
this Agreement, and all other matters pertaining to this
Agreement shall be determined in accordance with applicable
federal law.
15. Upon completion of the terms of this Settlement
Agreement, this matter shall be deemed terminated and resolved.
Nothing herein shall limit the right of EPA to proceed against
Respondent in the event of default or noncompliance with this
Agreement; for violations of S 203 of the Clean Air Act, 42
U.S.C. S 7522, which are not the subject matter of this
Agreement; for other violatibns of law; or with respect to
other matters not within the scope of this Agreement. This
Agreement in no way affects, or relieves Respondent of,
responsibility to comply with any other state, federal or
local law or regulation.
16. This Agreement shall be binding upon the parties
and their respective legal representatives, successors, and
assigns.
IN WITNESS WHEREOF, the parties have signed and acknowledged
this Agreement.
Respondent
by:__________________________________ Date:
United States
Environmental Protection Agency
by:__________________________________ Date:
Richard G. Kozlowski, Director
Field Operations & Support Division
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Section J Document 4
Civil Penalty Policy for Incorrect Aftermarket
Catalytic Converter Applications
04118/88
4
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o C
1D 1
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
1 L 6 , 01 cP
N tS
OmcEOF
AJR AND RADIATION
MEMORANDUM
SUBJECT: Civil Penalty Policy for Incorrect Aftermarket
Catalytic Converter Applications
FROM: Marc R. Hillson, Chief
Investigations and Enforcement Br ’anch
TO: Richard G. Kozlowski, Director
Field Operations and Support Division ,jLJ— c ./?ffe’y
On April 14, 1988’, a conference call meeting was held
between Erv Pickell, Rich Ackerman, Marc Hillson, Rick Friedman,
and Ken Meade to discuss the appropriate civil penalty settle-
ment policy for cases involving incorrect installations of
aftermarket catalytic converters. The discussion centered around
the perception that a 20/20 settlement for a $2,500 per violation
case was not appropriate in these cases.
Several reasons were given for this perception: (1) The
environmental harm in these cases is not as great as that in
other tampering cases because a converter was in fact installed
on the vehicle; (2) There was a feeling that if these cases went
to litigation a judge would not be inclined to impose a very high
civil penalty because of the relative minor degree of environmental
harm, therefore we need to have a realistic policy to encourage
settlement administratively; (3) The respondents in the vast
majority of the e cases are small muffler shop owners who couldn’t
afford to pay $1 ,000 per violation in addition to installing the
correct converter.
All of the participants agreed that a better policy in
these cases would b to cite the statutory $2,500 per violation
language in the NOV. but state that based on respondents history
of compliance with the regulations the size of the respondents’
business, etc., EPA has decided to propose a civil penalty of
$1 ,000 per violation. The settlement policy would then be as
follows: The case attorney would be given a great deal of
latitude to determine the egregiousness of the violations. If
circumstances showed that the violations were not a deliberate
disregarding of the policy, but were in fact due to a !nLsreadlng
of the parts catalogue or a parts availability problem, or if a
-------
—2-
financial hardship claim was proven, the attorney would have the
discretion to settle for 20/20 based on the $1 ,000 per violation
proposed penalty. However, if the attorney discovered that the
violations amounted to willful disregard of the policy or a
deliberate misapplication the attorney should require more than
a 20/20 settlement.
If a respondent has one or more prior violations the NOV
penalty amount will be the full $2,500 per violation. Settlement
negotiations will follow the traditional process with a 20/20
settlement being the bottom line. In addition, if a case does
not settle and is referred to the Department of Justice, the
Litigation Report will seek the full $2,500 per violation civil
penalty.
It was agreed that this ajproach seemed to be the best as
far as being equitable and workable while fitting into agency
civil penalty guidelines.
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Section J Document 5
Sale and Use of Aftermarket Catalytic
Converters
NOTE: Contained in a Federal Register notice, 51
Fed. Reg. 28133 (08/5/86)
08/05/86
5
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Tf
Federal Register I Vol. 51, No. 150 / Tuesday, August 5, 1986 / Noticjs — 28133-
[ FRL-3060-3]
Sale and Use of Aftermarket Catalytic
Converters
AGENCr. Environmental Protection
Agency (EPA).
ACTION: Notice of exercise of
enforcement discretion.
SUMMARY This action announces an
interim enforcement policy regarding the
sale and use of repalcement catalytic
converters (“converters”) for motor -
vehicles. The basis for this interim - . -
enforcement policy is described -
elsewhere in today’s Federal Register
under the head ig “Sale and Use of
Aftermarket Catalytic Converters, - -
Notice of Proposed Enforcement Policy.” - basis for the exercise of EPA’s —
From the date of publication of this enforcement discretion with regard to -
notice, EPA will exercise its — - the enforcement of the tampering’
enforcement discretion not to prosecute prohibition against sellers,, installers and
any installer, seller, or manufacturer of manufacturers of afterinarket catalytic
repalcement converters that voluntarily converters. Specifically, although the
complies with the guidelinesproposed ifl final policy may be issu d with -
the Notice of Proposed Enforcement - - subsantialmodffications, or noi at all.
Policy, until a final decision is made on depending on the comments received, no
the Proposed Enforcement Policy. = — installer, seller or manufac 1r r..L . - -
ADDRESS Any comments and - -: - voluntarily’ càmplyinjwith the inte im
information regarding this notice may be guidelines ill e prosecuted for
submitted to the docket fotthe oposed ta T a ar suli f folio h :’ -
Enforcement Pohcy, Docket No A-84 < proposed gmdeline during iheinterun ‘----
i located at the Environmental period before the fin licy(n .“
-Protection Agency. Central Docket blihth aliswithd .
Section, West Tower Lobby, Gallery H wever. the Installation or sale of a-
LF.131, 401 M Street, SW.. Washington, ‘converter not cornplyin 8 with the Interim
DC 20460. The docket may be inspected guidlines, and which is not a new OE -. :- -
weekdays between 800 a.m. and 4:00 converter or its equivalent (as defined in
p.m. A reasonable fee maybe charge4 - the proposed policy) or i “certified”
for COPYU - converter, may be considered tampering
FOR FURThER INFORMATION CONTACT - or the causino 1hereof. ’
Janet Murphy or Steve Albrink (202) - - . . v - f
.j - This notice of the exercise o
382-2840, Fieia Jperations anu Duppori .
‘ enforcement cretion is mten e to
Division (EN.397F), U.S. Environmen u . .
Protection Agency, 401 M Street, sw.. supersede EPA a Mobile Source -
Washington, DC 20460. •Memorandum IA o y wi regcuu to
NF0RMATIOI - new or used aftermarket converters.
discussed more fully in the Notice of Additional Information. . -
Proposed Enforcement Policy published - . - - -
I 1. e .1 ‘ L ..l i p - Unuer ecubve
e ewuere in o...ay 5 , - . . •
the installation, sale or manufacture of a- must judge whether an action is ‘major
converter which is ineffective or less - — and therefore subject to the
effective than theneworigixial - 80!aReatOpa t.
- equipment (CE) coiwerter could.:.. Aflaly 3 i2. This act pls notmJ ,.
constitute unlawful tampering, or: becau notlikeJytQsult .
..causing of tampering, uhder section ‘ - (1) if çto he .economy
203(a)(3) of the Clean Air Act. Although ‘ of $100 million or more ; -
permitting only new OE converters to be - (2) A major incr asè In co8ta orprices;
used as repalcements would ensure full-: ‘ for consumers, IndividUal indusfries,’-,- ‘-
effectiveness and would not violate the: Federal, State-or local goveramet-
tampering prohibitions, these Parts 810 agencies; or geographià regions or -..
generally quite expensive and some - (3) SigIiificant adver e effect on - - - -
State and local vehicle Inspection! - -‘ - competition, employznent stm nt -
Maintenance (IfM) program officials are productivity, Innovation, or on the ‘ --
reluctant to require converter - - - T abth of United States-bàed : -
replacement for missing or damaged - enterprises to compete ith foreign-
converters because of this expense. The ‘based entO risëiln oi stics or export
proposed enforcement pohcy described markets. 1n fact. thi fnfthi
elsewhere in today s Federal Register is enfon ent polciy in llow . -
intended to encourage the development :addifio busI iös ê to tèi the -
of inexpensive, multiple-apphcation - catalyst repiacement market t&produc-
replacement converters, and ensure the - - - -. - - - - . - -
e fectiveness 0 ese P • U :repIncerneflt catalysts. It may also lower:
allowing their use as repaicements in - - cost to consumers and increase
certain circumstances, provided they - - - - , - -
- - - competiton since vemcie; ., . -
meet specified criteria EPA iw8 - -- - - • ‘ - hi will ‘ - -
requested comments on that proposed li f
policy. - - — - - - - - - ‘ -
EPA hereby gives notice that the -: acceptable catalysts. ,..
enforcement policy guidelines and ; - ‘ - This action ias submitted to the
performance criteria proposed - - Office ofManagemçntaiidBudget . :- -
elsewhere in today’s Federal RegLster -,(OMB) for review as quir
as Appendix IX to 40 CFR Part 85, will Executive Order 12291. Any comments -
be. from the date of publication of this - fromOMB and any EPA responsejo : -
notice and until a final decision is made such comments are available for public -
on the proposed enforcement policy, the jnaneøinn in fh - - - - -
Dated: July 25, 188O. -
DonR .t lay,- - -
Acth gAmisntAdthds1iatorforAirand
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28114
Federal Register / Vol. 51, No. 150 I Tuesday, August 5,1988 / Proposed Rules
requirements of Section 3 of the
Executive Order 12291.
List of Subjects in 40 CFR Part 65
Air pollution controL
Authority: 42 U.S.C. 7413,7601.
Dated. July 24,1986.
James M. Seif.
Regional Administi-etor. Region 111.
(FR Doc, 86-17580 Flied 8 -4 —8s, 8:45 am)
40 CFR Part 85
[ FRL-2974-41
Sale and Use of Aftermarket Catalytic
Converters
AGENCY: Environmental Protection
Agency.
ACTION: Notice of proposed enforcement
policy.
SUMMARr. This action announces a
proposed enforcement pohcy regarding
the sale and use of replacement
catalytic converters (“converters”) for
motor vehicles. The installation, sale or
manufacture of a converter which is
ineffective or less effective than the new
original equipment (OE) converter could
constitute tampering or causing
tampering under section 203(a)(3) of the
Clean Air Act. Although permitting only
new OE converters to be used as
replacements would ensure full
effectiveness, these parts are generally
quite expensive and some State and
local vehicle Inspection/Maintenance
(JIM) program officials are reluctant to
require converter replacement for
missing or damaged converters because
of this expense. The proposed
enforcement policy is intended to
encourage the development of
inexpensive, multiple-application
converters, an to ensure the
effectiveness of these products, by
allowing their use as replacement
converters in certain circumstances
provided they meet specified criteria.
DATES Comments or requests for public
hearing must be received on or before
November 3, 1986.
ADDRESS: All comments and information
should be submitted to Pubhc Docket
No. A—84--31, located at the
Environmental Protection Agency.
Central Docket Section. West Tower
Lobby, Galley 1, LE—131, 401 M Street,
SW., Wasington, DC 20460-The docket
may be inspected weekdays between
8 00 a.m. and 4:00 p.m. A reasonable fee
may be charged for copying.
FOR FURTHER INFORMATION CONTACT:
Janet Murphy or Steve Aibrrnk (202)
382—2640, Field Operation and Support
Division (EN—397F), U.S. Environmental
Protection Agency, 401 M Street. SW.,
Washington. DC 20460.
SUPPLEMENTARY INFORMAT1ON
Most light-duty motor vehicles built
since 1975 have been certified to meet
Federal or California emission
standards with catalytic converters
(“converters”). The converter is the
major emission control device used by
vehicle manufacturers on light-duty
vehicles primarily to reduce
hydrocarbons and carbon monoxide -
emissions. Three-way converters, which
have been’used widely since 1981. also 5:
help control oxides ofnifrog n
emissions. If a vehicle is property.
maintained and not operated on leaded -
gasoline, the converter should not
require replacement for the entire life of
the vehicle. However, improper
maintenance, converter removal,
accidents or the repeated use of leaded
fuel can damage or destroy the
effectiveness of the converter so that the
vehicle is unsafe, noisy, or cannot
comply with emissions standards or
local inspection requirements, thus
necessitating the installation of a
replacement converter.
On November 25, 1980, EPA published
regulations regarding the voluntary
certification of aftermarket parts
pursuant to section 207(a)(2) of the
Clean Air Act (see 40 CFR Part 85, -
Subpart V). These regulations contain
testing procedured for certifying : -
oxidizing catalytic converters and - -
essentially were designed to require
certified afterinarket converters to be as
good as or better than the OE converters
they are to replace, (To this date, no one
,has certified converters under the -
program.) The purpose of these
regulations is to protect vehicle owners’
emissions performance warranty rights
under section 207(b)(2) of the Act 1 if
they use such “certified” parts, and to
protect service and repair facility -
operators installing “certified” parts
from liability for “tampering” violations
under section 203(a)(3) of the Clean.Air
AcL - - -.
The proper use of a converter certified
to meet the voluntary aftennarket parts
certification regulations will protect the
vehicle owner’s emissions performance
warranty rights and can be installed
anytime without subjecting the installer
to liability for violating section 203(a)(3J.
‘Under Section m7(b)(2). if a vehicle has been
properly maintained and used, yet Fails at any lime
dunng its useful life to conform to applicable
emission standards (eg. by failing an eligible state
or local enussions test), and thus causes the owner
to bear some sanction, the vehicle manufacturer is
required to correct the [ allure at its expense.
On December 5, 1984 EPA issued a
notice announcing public workshops to
explore the possibility of establishing
alternative testing procedures r
aftermarket converters and requesting
Information and comments on the
subject 49 FR 47550(1984). That notice
stated that the workihops might result
in the amendment of the voluntary
aftermarket parts certification -
regulations. The notice also Included -
draft converter teSt procedures and
criteria to help initiate the discussion of
topics. Workships werç subsequently
held in January 1985 to discuss the ’
relevant issu ftei’comments were
Invited for a periad o 3O days after the
last workshop; —
- After reviewing the information - -
received, EPA decided against amending
the regulations with regard to the test
procedures and acceptance criteria for
catalytic con erters to be ‘certified”
under section 207(a)(2). t However, as
discussed below, EPA has developed a
proposed enforcement policy
(guidelines) on how it will enforce
section 203(a)(3) with regard to the
installation of aftermarket converters.
Although the proposed enforcement
guidelines merely reflect EPA intended
exercise of itsenforcement discretion -
and are not regulations, EPA proposes to
add those guidelines to 40 CFR Part 85
Appendb lX,1orihe convenience of any
- persons who rnaycho se to follow the -
-guidelines:’ - ’
In addition, is’discussed elsewhere in
today’s Fedéinl Register, the propos ed
guidelines’described hera will be, from
the date of publication of this notice, the
interim policy of EPA with regard to the
enforcement of the tampering ,-, - --
prohibition against sellers, installers,
and manufacturers of aftermarket -
catalytic converters. Although the final
policy may be issued with substantial -
‘modifications, or not at all, depeilding, -
on the comments received.,no installer.
seller, or manufacturer voluntarily -:-
complying with the interim guidelines - - -
will bepros cut&l for tampering as a - -
result of following the guidelines during
the interim period before the final policy,
is publishedor lids proposal is - -
withdrawn. However, the installation or
sale of a conveilei’not complying with
the interim guidelines, and which is not
a new OE don ’erter or its equivalent (as
defined in the pro?os pifyj or a -
EPA a. ho re x. preparing another proposal to
am od certain aspects of the aftei inirket parts - -
-, certiFication regulation in accó dance with a court
order In Speciality Equipment Manufacturers -
Association v Rucjcelshaus, 720 F2d 1Z4 (DC. Cir.
19831 The prov sions subject to that proposal are
not at Issue here- - —
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Federal Register / Vol. 51, No. 150 / Tuesday, August 5, 1986 I Proposed Rules
28115
“certified” converter. may be considered
tampering or the causing thereof.
Section 203(a)(3) of the Clean Air Act,
12 U.S.C. 7522(a)(3), prohibits parties
named in the statute from tampering
with emission control systems on motor
vehicles and prohibits any person from
causing tampering. Specifically, section
203(a)(3) prohibits vehicle
manufacturers, dealerships, service and
repair facilities and fleet operators from
removing or rendering inoperative any
emission control device or element of
design installed on or in a motor vehicle.
In addition, section 203(a) prohibits any
person from causing such tampering.
Tampering with emission controls can
include removing, disabling or -. -:
destroying a part of the emission control
system, or installing an incorrect or
ineffective part in or on any motor
vehicle designed to meet Federal or
California emissions standards. The
installation of a new OE converter
identical to that with which the vehicle
was onginally manufactured would not
be a violation of the Act.
Many urban areas have air pollution
problems caused primarily by motor
vehicles The majority of these areas
have been or will be implementing
vehicle inspection or testing programs.
EPA’s 1984 Tampering survey revealed
hat 16% of all vehicles have had their
;onverters removed or have used leaded
gasoline, which in effect ruined the
converters’ ability to lower emissions.
Many of these vehicles are now or soon
will be subject to inspection or’ testing
programs. ‘ - - . - -. -
EPA is actively promoting state and
local tampering’inspection programs
which would require converter
replacement where missing or lead-
poisoned converters are discovered.
There is no-question that effective
converters in place of lead-poisoned or
missing converters would directly
impro%e compliance with emission
standards and benefit air quality.
However, the Agency believes that
some inspection officials have been or
will be extremely reluctant to require
converter replacement because CE (or
equivalent) converters are relatively
quite expensive (e.g., between $300 and
$500 installed). Thus, EPA has decided
that its success in persuading State and
local governments to implement such
programs depends, in part, on the
vailabihty,and cost of replacement
converters. EPA is also concerned that
replacement converters used in any such
program be of sufficient quality to -
provide vehicles with a reasonable
pportunity to comply with applicable
andards and to provide as much air
.,uatity benefit as reasonably possible.
It has been suggested that the major such cases, EPA believes that the
reason that new CE converters cost so substantial emissions control provided
much is that they are engineered and by converters meeting the criteria of this
designed only for specific applications, policy would be a great improvement
if aftermarket converters could be, compared to the lack of control caused
consolidated into a limited number of - by missing or poisoned converters:Thus,
multiple-application converters, then the the primary purpose of the proposed
costs to the consumer could be reduced policy is to support state and-local
considerably. Thus, the proposed antitanipering inspection programs by
enforcement policy is intended to foster encouraging them to require converter’
the development and allow the use of replacement where the converteris
less expensive, multiple-application - -- missing, lead poisoned, or otherwise ‘
replacement converters ineffective -
The proposed performance criteria are EPA does -not intend to permit theuse
based on EPA data onihe performance of afterniarket-converters peeling the•- ’
of properly maintained OE converters:: criteria dis iussed below to restor& the
with less than 50,000 niilesof ise. The emission cóñtrol capabilities f vehicles
criteria for new aftermarket converters ori ll rèquip d with coiivei ters ‘and
require such converters to perform . . operated outside the U.S., Canada or
effectively for up to 25,000 miles of use, Mexico and subsequently brought back
as demonstrated by testing on worst to the US. pursuant to 40 CFR 85.1509,
case vehicles, so that the emissions or to replace properly operatingOE
reduction benefits for the average - converters, or as replacement converters
vehicle and the total fleet that receive - for warranty or recall purposes. Since
them would be greater than the criteria properly maintained converters -
might indicate. While the proposed - normally would not require replacement
policy specifies that prototype converter for the life of the vehicle, such uses will
aging is to be by vehicle mileage be considered violations of section
accumulation, it also allows for . 203(a) (3) of the Act -
accelerated aging if it can be -. . EPA also recognizes that in som
demonstra ted that the procedures are as limited circumstances the original. -
stringent as vehicle mileage - converters may fail or be damaged and -
accumulation. The Agency.is working require replacement for reasons other -
with the industry to develop such an .. than misfueling or converter removal.
aging alternative which could be - Under, these circumstances, if the
available for the final policy:” - - vehicle is less than 5 years old, has
The performance criteria for used accumulated less than o,ooo miles, and
aftermarket converters are designed to , a state or local inspectioi progi am has..
screen out the used OE converters ; - 1. .. not determined thatthe existin ;. ’.
which have obviously been extensively?:- converter needirep1acei ént, the
fuel switched or whose performance has vehicle’iexpectéd rémaiñing ileful if
been severely affected by prior use. As a may be significant an d should i equire
result, each used converter must be - . replacement with a new OE or •
tested by a bench test procedure under equivalent convertel’. Moreover, the 5 -
the proposed criteria. . year/50,000 mile emissions warranty
EPA recognizes that converters which presumably would be applicable to
meet the proposed criteria of these . those vehicie3. For vehicles over 5 years -
guidelines may not perform at the same . . old or with more than 50,000 miles. on
level over as extended a period as the - the other hand, it niay be appropriate to
new converters installed by- the vehicle. - allow th&usé of aftermarket converters
manufacturer and that their use meeting the criteria of these guidelines if
therefore may not completely protect the -‘ there is a legitimate need for
vehicle owner’s emissions warranty - - replacement, even though-not dueto
rights under section 207 of the Act. 3 ! - removal or poisoning of the converter,
- and even if the state or local inspection 2
3 Under section 2071b)(2)(A) of the Act, an owner- program has not ordered replacement . -
who has removed or poisoned his original converter Thus, this proposed and interim policy
by misfueling probably has already voided the only applies to converters that meet the
manufacturers performance warranty for the . . . . L 1. - -.
catalyst itself by failing to properly maintain the criteria described in me attacne . . - -
vehicle Of course, if an owner wishes to presel4e - guidelines and that are used as -
whatever performance warranty rights remain with replacement ônvertersf(1 On a vehicle-
regard to emission-related parts affected by. which Is missing a comFerter. oi (2) -.
converter performance, the owner could elect to.. — - - , - - -
repiace the converter with an OE or certified . pursua.nt to a ueteLiulfla uOfl uy a e - -
converter Under the 207(aI warranty, if the use of - or local inspection program that the
anything but an OE or eqwvalent or certified - - existing converter has been lead-
converter has caused the malfunction of any other poisoned or dariIaged or otlierwlse
emission part or emission-related part, that part -i . - -
should not be considered defective” and rosy neeus rep acemen or or ye IC - - -
be covered under that warranty, over 5 years or 50,000 miles old where a
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28116
Federal Register I Vol. 51, No. 150 I Tuesday . August 5, 1986 I Proposed Rules
legitimate need for replacement has
been established and documented. All
other converter replacements by
regulated parties are potentially subject
to enforcement actions under section
203(a)(3) and, thus, the replacement
converters must be OE or equivalent or
certified converters. In order to prevent
converters meeting the criteria in this
proposal from being improperly used to
replace properly operating converters,
EPA will be monitoring their use. If it
becomes apparent that abuses are
occurring, EPA may change the final
policy, or eliminate the policy entirely,
so that the use of such converters by
named parties may be considered a
violation of section 203(a) (3) under any
circumstances. -
The proposed policy is intended to
supersede EPA’s Mobile Source
Enforcement Memorandum IA only with
regard to new or used aftermarket-
converters.
Additional Information
Under Executive Order 12291, EPA
must judge whether an action is “major”
and therefore subject to the
requirements of a Regulatory Impact
Analysis. This action is not major
because it is not likely to result in:
(1) An annual effect on the economy
of $100 million or more;
(2) A major increase In costs or prices
for consumers, individual industries,
Federal, State, or local government
agencies, or geographic regions or
(3) Significant adverse effect on
competition, employment, Investment,
productivity, innovation, or on the
ability of United States-based
enterprises to compete with foreign-
based enterprises in domestics or export
markets. In fact. the proposed policy
will allow additional businesses to enter
the converter repLacement market to
produce, market, or install acceptable
quality replacement converters. It will
also lower costs to consumers and
increase competition since vehicle
manufacturer’s dealerships will no
longer be the only suppliers of
acceptable converters.
This action was submitted to the
Office of Management and Budget
(0MB) for review under Executive
Order 12291. Any comments from 0MB
and any EPA response to such
comments are available for public
inspection in the docket
Finally, the proposed policy will
impose reporting and recordkeeping
requirements for those companies which
voluntary enter this market. Information
collection requirements affected by the
notice have been submitted to 0MB for
review under the provisions of the
Paperwork Reduction Act. Any written
comments from 0MB or response from
EPA will be included in the docket.
List of Subjects in 40 CFR Part 85
Imports, Labeling, Motor vehicle
pollution, Reporting and recordkeeping
requirements, Research, Waçranties.
EPA proposes to amend the table of
contents to 40 CFR Part 85 by adding a
reference to Appendix DC. entitled
Enforcement Policy For Sale and Use of
Afterinarket Catalytic Converters.
Dated: July 25, 1985.
Don R. Clay,
AsszstanlAdm ,nist ,rvtor.
PART 85— [ AMENDEDJ
1. The authority citation for part 85 -
continues to read as follows: - - . -
AuthorIty. 42 US.C. 7522(aJ(3J.
2. EPA proposes to amend 40 C}1 . Part
B5byaddu iganewAppendixlX.to -
read as follows:
Appendix IX—Enforcenient Policy for Sale
and Use of Aftermarket Catalytic Cuuv ,rtur ,
A General Reqwrements
Regulated parties shall install new or used
aftermarket catalytic converters
(“converters”) on motor vehicles only if the
converters are represented In writing by the
distributor or manufacturer to have been
tested according to the following procedures
and to have met the performance criteria
specified below, or are certified (under 40
CFR Part 85, subpart V) or are new or
eqwvalent to new original equipment (OE)
converters. “Regulated pa es” means any
person engaged Inihe business of repairing.
servicing. selling. leasing or trading motor
vehicles or motor vehicle engines, or who
operates a fleet of motor vehicles.
“Equivalent” means identical or better In all
em issionratedrespectsasdet edby --
the US. Environmental Protection Agency
(EPA). -
New or used aftermarket converters that -
meet the performance criteria specified
herem may be Installed in the following
situabons (1) If the vehicle is missing a
converter (2) if a state or local inspection
program has determined the existing
converter has been lead-poisoned or
damaged or otherwise needs replacement; or,
(3)11 the vehicle is more than five (5) years
old or has more than 50,000 miles and a
legitimate need for replacement has been
established and documented. The third
situation normally would include only
plugged converters or those damaged to the,
point where unrepairable exhaust leaks are
present. Any other converter replacement
must be with a certified or new OE or
equivalent converter or it will be considered
tampering. ‘ -
In order to establish and document that the
circumstances penmtting replacement of an
original or missing converter with an
aern converter meeting the required
performance criteria exist, the installer must
include the cust ner’s name, complete
address. and the make, model year end
mileage of the vehicle on the service invoice
along with a stated reason for replacement.
Where a state or local government has
determined that a converter is damaged or
needs replacement, the service or repair
facility also must retain a copy of the written
statement or order by a proper government
representative which Indicates that the
converter should be replaced and attach It to
the invoice. Where the replacement need has
not been verified by a proper state or local
government representative, the customer and
a representative of the service or repair
facility must sign a statement verifying that
replacement is jusUfled This statement, -
which may be contained on the invoice or
separately, shall consist of the following. -
Catalytic converters are émlasioncontrot
devices which are designed to last the life of
the vehideand denot normally requ -
replacement: Purthermöre,1f thivehicle is
properly use and inai iitalued, original -
converters are covered by the emissions.
control warranty for 5 years c i 50,000 miles.
Federal law prohibits repair businesses from
replacing these devices except under certain
limited circumstances. -
In order to verify that the proper
circumstances exist, the owner of the vehicle
on which such repairs are made anda facility
representative must sign the following
statement.
—The vehicle Is over 5 years old or has more
than 50,000 milea on it and the catalytic
converter required replacemeiit
because
OR - -
—The vehicle’s catalytic converter was
missing when the vehicle was brought is.
VebcleOnefsS ignatzzre
- Facility Representative’s Signature :- -
Installers must retain copies of the Invoices
- and statements for elx(8) months. and the -
- replaced converters (If any) for at least is - -
daysfrointhedateoflnstaflajionofthe -
replacement converters. Replaced converters
must be marked in such a way that they can
— be Identified with particular customer
Invoices and statements and be available for
EPA inspection.
All other converter replacements or
Installations, such as on vehicles imported
without converters pursuant to 40 Q ’R
85.1509, or on vehicles covered under
warranty or being recalled also must be with
- new OE or equivalent or “certified” - -
converters. Persons who install or sell -
aftermarket converters that do not meet the
criteria and conditions specified In these
guidelines may be considered liable for -
tampering or causing tampering. -. -
These guidelines shall be effective for all
- afterinarket converters manufactured or
recycled after [ insert 30d. .ys frem Nov. 3,J ‘YV
publication) - and apply to converters which
meet the definitions of and autena for new or
- used aftermarket converters asatated below.
- - B. Test Pmcedures and Perfonnaace Criteria
1. NewAfteniarketCw, rtera-
- -, A new aftermaiket converter is defined for
purposes of these guidelines to be a converter -
I
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Federal Register / Vol. 51, No, 150 / Tuesday , August 5, 1986 / Proposed Rules
28117
which has: (1) All new matenain or. (2) any
new materials which make the converter not
equivalent to an OE converteri or, (3) any
construction which makes the converter not
equivalent to an OE converter New
converters require limited vehicle durability
testing by the converter manufacturer on
worst case vehicles in each application
categoey and the converters must meet the
exhaust emission control efficiency
requirements listed below. The converter
manufacturer must demonstrate that the
converters meet applicable performance
standards as described below after 25.000 -
miles. wbid is censidered half thesr useful
lives -
(a) Two vehicles us each application -
category are normally required Loaxiduct the
mileage accumulation and testing. The
application category is to be defined by the
converter manufacturer. Application category
can refer to the types of vehicles and/or
engines the converters are to be installed on.
or the types of OE converters the aftermarket
converters are to replace. In addition, the
converters must be identified as one of the
following- (1) Oxidation converter, (2) three.
way converten or (3) three-way-plus-
oxidation converter.
(b) The vehicles for which the converter is
an appropriate installation are to be defined
by the converter manaufacturer. The
converter manufacturers must supply this
information with each converter so that the
installer can easily and clearly know the
vehicle application(s).
(c)Tie we tcase vehicles hi each
application category are required to be tested
by the converter manufacturer. Absent any
information supphed by the converter
manufacturer, the worst case for each
application categosy will be the highest test
weight/laigest engine displacement wiThin
the application caterogy. This combination is
determined by selecting the lazgest engine
displacement within the highest test weight
class. Test weight is described in 40 CFR
86129-80. Information on test vehicle/engine
selection is available from EPA’s certification
summary data.
(d) Durability mileage accumulation shall
be conducted on at least two test converters
for 25.000 miles each, using the mileage cycle
in Appendix IV of 40 CFR part 86 for tradc
mileage accwnuiation or one that is typical of
in-use operation and equal to that cyde for
road mileage accumulation. Commercially
available unleaded fuel and oils of the grade
and quality specified by the manufacturers in
the owner’s manual shall be used The
vehicles shaU be set to manufacturer’s
specifications. eqwpped with the test
converters for the entire mileage
accwnulation and records of all vehicfe and
engine maintenance shall be kept. No
maintenance of the converters is permitted.
Different vehicles may be used for mileage
accumulation and testing if they are equal
with, respect to emission related parameters
(i e., “siave ’ vehiciefs) may be used for
testing).
(e) As en alternative to vehicle mileage
accumulation, acceleTated bench testing
which simulates the 25.000 miles
accumulation may be used if itcan be
demonstrated to EPA in advance that the
procedures are at least as stringent as vehicle
mileage accumulation.
(1) At the end of the mileage accumulation,
two cold start Federal Test Procedures
(FTP”) tests (including the heat-build portion
of the evaporative test) descri bed in 40 CFR
part 88 shall be performed on each vehide
The pair of test results will be considered
consistent if they are within. 10%.Sor HC and
CO and 15% for NOR. If the results are
consistent, the results shall be averaged to
obtain the with-converter (wit) enussions. If
the pair are not consistent .e .-not wsth.n40%-
for HC and CO and 15% for NO ,a third test
may be run The results of the third test may—
be averagedwith either of the first two tests
if the resulting pair is consistent. ie, within
1D% for HC and COaiidIS% for NO If the
third test does not result in a consistent pair,
then the design will not be acceptable unless
the manufacturer can demonst.-ate to EPA’s
satisfaction that the first three tests were not
repeatable due to non-converter problems
(e g.. test equipment. etc.) and that there is
repeatability on subsequent tests.
(g) If the w/c tests produce a consistent
pair, the aftermarket converter shall then be
removed and replaced with an exhaust pipe
which adequately simulates the exhaust
backpressure characteristics of the converter.
No other maintenance or modification to the
vehicles is permitted between with- and with-
out-converter configurations. Two more cold
start FTP tests shall be run on each vehicle
with converter removed. The results shall be
averaged (if they meet the above consistency
requirements) to obtain the without-converter
(wofc) baseline values.
fh) The converter efficiency shall be
determined using the following formailai
100 (emissions (wofc)- -
effic iency= ( wJc) )
emissions (wo-c)
In order to be an acceptable converter, the
converter efficiency determined above must
be greater than or equal to the values shown
in the following table for each of the two
converters.
TABLE 1
s_
-.r 1w
—
HC on
O ncoa.eiie
‘iPree-way mrve ,t
live .wey .Øj s.ondabofl . - —
10
70
70
10 (‘)
10 30
10 30
‘No mi eeewit
(i) Converters produced after the-:
qualification process baa been succeesfidly
completed ‘shall he identical to the
qualified converters in all material respects.
A listing of these cbaracten and the
information to be supplied to EPA shall
include the following:
(11 Catalyst supplier and address.
(2) General type of converter (e.g..
oxidation, reduction, three-way.. etc.).
(3) Number of each type of catalyst used
per can (each individual monolith unit or
“biscuit” is considered to be a separate
catalyst for purposes of determining the
number ofcdtalysts per can).
(4) Substrate (e.g.. monolithic. pelleted)—
give configuration construction technique
(e g.. extruded, laid-up, Formed. Dravo disk.
etc). composition, supplier and address. -.
composition of active constituents in -
sub trate (grains or ?royounces ) for -
monolithic substrates, give number of cells
per square inch of frontal ares and design
tolerances, nominal colt wall thickness (e.g..
in m for pelleted wbat i ten, . givepePet
• shape and dimensions, pellet b-’k . I’wisity-
- specify (if applicable) .thei of more than.
on eo&pellet(e.g R 2t/Pd ). specify
any melsicufdisfrsbsihoa -ol pe 4 *e , and (if-
thia ia cootrolied in pradactioni specify 4he -
mean impregnation depth (e.g ,.in. micxonsl of-
active matetial, and include production
tolerances. . - -
(5) Washcoat—give composition of active
constitoents. and total active material loading
(grams or troy-oz) in washcoat. -
(5) Active material—give composition of
active constituents, loading of each active
material including design tolerances, total
active material loading including design
tolerances (grams or troy-os)
(7) Container—dimensions, volume.
matenals used, technique of contaminent and
restraint. method of coentructing t n4ainer.
canner (if thfferunt from catalyst supplier).
and insulation and sleeldang (converter andf
•or vehicle)
(8) Physical description—dimensions (e.g..
leng&width ,heinjit. etc.j.w ght (the).
volume including design tolerances. active
surface area (BET),. aa total active. surface
area-uscIudmg-d cign tolerarices - —
- (j) The.cowrerter manufacturer shall .
endose with eacliconverter a stateaieat that
it has been designed and.manufacturvd to
meet the EPA enbuiun reduction- - - -
reqwremeotafhe the deaignated typeini -
converter nail shall 1 ,t that when the- -
vehicle si peopes4y menitniaeri. the converter
will meet the ssion redaction -
requirements specified in paragraph Ui) fur
25.000 miles and that the cxinverter-uiill not
constitute a sa.fety hazard.
(k) To ensure that new aftermarket
converters have adequate e terna1 durability
which will make them effective alternatives
to OE converters the converten manufacturer
must design and warrant the external
converter shell. including the end pipes, to
last for five (5) years or 50.000 miles
(whichever comes first) from the date of
instalFation. - , .• - - -
(I) The co&eerter manufacturer shalr
enclose with each converter the specific
vehicle applications of that converter arid a
warranty appbcation card to be returned to
- the vrmaeafactvrer whichwill--’
include time vehicle owner’aname and
address. phone au er. the rnahe;snode.
year and ini *ge of Ihe’ ehicle. the date of’ - --
installation. the- aliuiig 6ealer’s n - and
address and the purt ber (af installed. All-
such-cards applicabons t- i nmd.
by the cozweteanufactiirerforapenodof-
five (5) years.
(rn) New converter manufacturers slieR
report to EPA -semi-annually the infa tion;.
contained on the warranty cards received
-------
28118
and the number of each type of converter
produced during the period The warranty
card information shall consist of either a
listing of the names and addresses of
dealerships urchasing new converters, and
the number of each type of converter sold or
installed by each dealer or copies of all
completed warranty cards received by the
manufacturer. In either case, such
information shall be submitted within 30 days
of the end of each period. The reporting
periods shall end on June 30th and December
31st of each year
2. Used Converters
A used converter is defined for purposes of
these guidelines as a previously used OE
converter which does not meet the definition
of a new converter. This includes used
pelle ted CE converters which have had the
pellets replaced with new or used OE -
equivalent pellets. For used converters, no
durability testing is required but each
converter must be tested as specified below.
Only used CE converters can qualify under
this procedure The types of tests are’ (1)
Container mechanical integrity check. (2)
substrate mechanical integrity check, and (3)
performance test.
(a) Each converter must be identified with
respect to application category The
application category is defined as those
vehicles for which the converter was the
original production converter.
(b) The converter shaU be inspected by the
remanufacturer to determine which type of
converter it is—oxidation converter, three-
way converter or three-way plus-oxidation
converter__and that the container (the
“can”) is structurally sound. There must
be no leak paths in the can. The can
must have acceptable backpressure
characteristics, i.e.. not be plugged. The
substrate must be sound and not be
melted or attrited. It shall not rattle.
(c) The performance test which shall be
used for used converters is similar to the
Ceneral Motors “Cell 102” test, and is as
follows. A converter originally at room
temperature is subjected to an exhaust flow
of known composition and temperature.
Because of the exothermal chemical reactions
that occur, the converter heats up Therefore
two important converter parameters, light-off
and stabilized efficiency, are measured on
the same test. Each converter is tested and
the exhaust gas constituents are read before
and afterijie converter. Converter efficiency
values for HC and CO conversion are
computed at 120 seconds and 200 seconds A
light-off test and stabilized efficiency test can
be performed consecutively. The exhaust is
set to the control parameters while bypassing
the converter through a pipe set to a back-
pressure equal to the test system. At
tume=zero, the exhaust stream is switched
into the converter system and a strip chart
records exhaust gas constituents (before and
after the converter) versus time From this
chart the conversion efficiency vs time curve
can be established. Each converter must meet
all applicable requirements in Table 2.
TABLE 2 -UcaIT.0 1c AND STABIUZED CON-
VERSION EFFICIENCY VALUES FOR UsED CE
CONVERTERS
(In pefoenhi
Cen’ ener 1YPO
mmum
NC CO
O i dat ion_______
l t wee-way...
Thee-way-pius Osithtion... ..
50 50
50 50
50 50
Hmnnum
effic ency at
200 snconds
NC
75
75
75
co
75
75
75
X .X—is the manufacturer code issued by EPA
YYYY—is to be a numerical designation of
the vehicle application(s)
ZZZZ—is the month and year of manufacture
(i.e., “0188” for January, 1986)
D Manufacturer’s and Remonufocw,’e,-’s
Representations -
Federal Register / Vol. 51, No. 150 I Tuesday, August 5, 1986 / Proposed Rules
________ A manufacturer’s or remanufacturer’s
determination that its converters meet EPA’s
________ acceptance criteria does not constitute a
certification, accreditation, approval, or any
other type of endorsement by the. -
- Environmental Protection Agency of anyl
The control parameters for tlus test claims concerning ’pollution control or any’ -
1. Engine type and Displacementi -8, 350 . other.alleged benefits. No clam) of any kind,
to36OClD. -
2. Engine ± -- - ‘such i”App’rovêd Jor Certifledj by the
3. Converter Inlet C0 2%±0,05% CO3O ’ Environmental .may be
- made
4. Converter Inlet TemPerature 73O’± O’F tnie statements -
(set using engine load). - ,‘. -. - ucii as the following may be made
5. Air Injection Pump: 20Cm, (Maximum).
6. Air Injection Drive Ratio. i5. - the emissions reductions requirements and
(Maximum). criteria required by the US. Environmental
7 Converter Mounting’ The converter may Protection Agency which would allow the
not be located closer than two (2) feet from proper installation of the converter without
the location In the exhaust system where the the installer being liable for violating the
exhaust from the two engine banks is joined tampering prohibition of the Clean Air Act .”
together. £ Confirmatory Testing orAuditing by EPA
8. Converter pre-test temperature: 90 ‘F -
(maximum normally, 100 ‘F if room EPA reserves the right to inspect facilities
temperature makes it necessary duO to and records, to observe testing and to run
outside ambient temperatures above 90 ‘F). confirmatory tests to validate any part of the
(d) At the option of the used converter qualification process. If EPA finds that a
rernanufaciurer, small size converters (less manufactureys or remanthciurer’s -
than 100 cubic Inches of converter volume) converters do not meet the apphcable
may be tested using a smaller engine if the - criteria, EPA shall notify the manufacturer or
following additional requirements are met. - resnanufacturer of such finding, and that the
The oxygen concentration at the converter - manufactureror remanufacturer may be
inlet is 5 percent ±05 percent, and the liable for causing tampering for any - -.
converter space velocity is not less than applicable converter installations (past or . - -
25,000 lu—i, future) and thatthe-continued installation of
(e) The converter remanufacturer shall the converters by regulated parties may make-
enclose with each used converter a statement those parties liable for violations of section
that it has been tested according to the test - 203(a)(3) of the Clean AirAct,.
procedures for used converters and meets all
applicable requirements at the tune of testing. FInstal1atioflkeq n nt •.
(f) The converter remanufacturer shall . - In order for the Installation by a regulated
enclose with each used converter the specific entity of an aftermarket converter meeting -
applciation(s) of that converter, the conditions described in A through E.
(g) The converter remanufacturer 8hall - above, not to be considered a violation of -
report to EPA on a semi-annual basis the
names and complete addresses of the persons seCtion 203(a)(3) of the Act, the converter -
must - - -‘
or companies to whom it distritues along with (1) installed only In situations as
the number of each type converter sold to
each. This information shall be submitted defined in A above -
within 30 days of the end of each period. The (2) Be in the same lo atio!1 as e original
reporting periods shall end on June 30th and converter ‘ -. -
December 31st of each year. (3) Be the same type of converter as the
original donverter (i.e., oxidati n. three-way,
C. Lczbehng - -‘ or three-way-plus o,ddation); - • ‘“- -.
The converter manufacturer or (4) Be the proper converter for the ehicle
remanufacturer shall lable each new or used - application as determined and specifl d by
converter with a visible, permanent the manOfacturei’: . - , ‘ - - —
4 —a
nondestructible label or stamp, which will (5) Be connecfed party tO any exfsthij
identify the manufacturer’s code (to be issued air injection components on the vehicIe;’
by EPA when requested by lettei ). vehicle (6) Be ‘uistOlléd vith all the other required
application code (to be supplied by the -- converters for thàticuai hoiIt
manufacturer to EPA), the month and year of more than one Oonverter wasmnstalled -
manufacture, and information about whether ‘,. originally by the vehide anufai turei ârJn
the converter is new or used. The label - - ,the case of new aftemulrket converters if - -
information shall be In the following formats ‘more than one converter was ipecifled &y the
(1) New Converters—N/XX/YYYY(ZZzz convertefmanuIacturer
(2) Used Converters—U/XX/YYYY/zzzz - (7) Be accompinied by the’i ariin ty
N—is for a new converter designation information card, filled in by the installer, if -
U—is for a used converter designation - - the converter is a new converter.j ._ .r
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- . Federal Register / Vol. 51, No. 150 / Tuesday, Aujust 5, 1986 / Proposed Ru1es - 28119
C. Notif icotion of EPA by otoIyst
Manufacturei and Remanufocturers
Any converter manufacturer or
remanufacturer which markets converters
under these guidelines must notify EPA of its
intent to do so thirty (30) days prior to the
actual introduction of each product line. New
converter manufacturers must include or
have submitted a summary of test results -
inducfing vehldeIthted .. method of mileage
sccomclati n, naIj e arid location of testing
- facility, teitresalts, intended vee
application s id the conveiter i orma tioe’
• specifledinB .i.(I). Used ’
remanufacturer, must include a da tea-
of the test facili(y and Its location and the
intended vehicle applications of the -
convefle$). The f ,rmatlon shall be sent to
EPA -3s7F). 401 M Street S.W
Washmgtom. D.C. )i88. Manufacturers and
renianufactarers shall include any other
information which they deesi relevant to a
determination that the subject converters
meet the requirements set forth in these
guidelines.
H. Notvficat,onr of Dealers and Distrzbators
by Converter Marwfocsnrerg cod
Remanufacture , ,. - -
Any converter manufacturer or
remanufacture, which markets under these
rules shall have a system in place to notify
and shall notify all of its known dealers and
distributors of the proper installation
requirements and restrictions which are
applicable to parties named hi sectioa
203{a)(3) c i! the (3een Ak Act es they’ apply - -
to the ese outs converters. lEthe -‘ — - -
manufacti e r euufud is notified by.
the EPA that converters prothicodo, s by
it do not meat the-apphcabfe acceptaa
criteria desaThed aliove..tha ianulactareror
remanufacturer shall promptly notify all of its
known dealers and distiibulors of that fact - -
andthatthet tjonofthe -
affected converters may be coneldered to be
violations of section Z 3(a)(3J of the Clean
AkAcL - •
[ FR Doc 88-17555 FUed 8-4-88 8:45 amj
B UNO DE - -
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Section J Document 6
New Agreement Between FOSD, FMD, and Claims
Officer for Processing of FOSD Collectables
07105188
6
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHLNGTON,D.C. 20460

JUL 5 (988
OFFICE OF
MR A1 D RAD ATIOIM
SUBJECT: New Agreement Between FOSD, FMD, And Claims
Officer For Processing Of FOSD Collectables
FROM: Marc R. Rilison, Chief 4 .L4jtifg .
Investigations and Enforcement Branch
TO: All Branch Attbrneys
Attached is draft Memorandum of Understanding between
FOSD, the Financial Management Division (FMD), and the Claims
Officer (Ray Spears), setting out each offices’ responsibi-
lities with regard to FOSD collectables. This document is
effective immediately as a working agreement between us and
FMD.
Please note that we are required to send the first bill
to the Respondent with the Settlement Agreement (copy attached),
using the same blank bill form as we use for FOIA’s. We will
continue to send a copy of the Settlement Agreement to FMD
with a cover memo (example of memo attached). Also not that
we are required to notify FMD if the Respondent fails to
complete any credit project on time. -
If you have any questions or constructive comments on
this memo or collections process, please direct them to Rick
Friedman (382-2940). Also, please keep Rick informed of any
settlements that have not been paid and need to be collected.
Attachment
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MAY 2
SUflJt.CTz Coilect:a:i oi Penalties Due i.PA Pursuant tonesa -
Oper’stt 098 P nd Sueport Di v2Sj on Ccttietaeat &grecments
Original Signed BtI
R caard G. o:io t*fl Lsrector 3 j 0 fl G. Koziowaki
? alti Opti-ati ni And Support Dt vision - - --- - - -
.neotte I. . Goeri )J:ertor
nc. l !5.?noqer,er4t t) s on
ne tu rpns e ar U t zte%ora dt&n : to request your suppott -
.n est ujishing promdurea nece % iry to aaure proper pomting.-
hilLing. &nd coilect;oh at pen-lt.es cued .PA pursuant to -
ectIcne’ytu ohtan ed ay tk e Y e iti Operations and Support
u: vision. - - -•- - - - -
tr e V eid Opexat cts rind Support D l v ision i9thargidvtttr>
e n c. cnent of Sectiur. 203 in 2fl oi the elean Air Act, :. :
deal ing 1 i -n part. with rcgulaticn of cotorvehl :fue1granë .
oeiss onc control stt taapecing VIolation of
3108S sabjoct nclctcrc to aubateatial cin2
Detore brInging an action &qaJnet a -vicUatór in f.der*L % ? i-.
di tnct court. we attezipt to re o1ve the nattutiWtotaafl - ,:-
throu 9 h a ctt1enent &greewent aetween the respondent and -.
EPA. It ye are succcss±us in re chtng A-aettSe eJtt.-- epreflce
an aqrsemeat in the nature at a contrmct tbat rbqn1 e. tbcç
respondent to pay nancy to tPAe - -
The nunber ot- cats hacdled and niounts ct-Möiij-- ,
are s±çnit. cant. DQrinv f iscal ats FJB6 ndJfl 2
l o S cases and collected 6.9 i.lLica dnllar&. - tntti
or canoe thoireppoakiant- paid W ith in-the ;t iSSrfll
ogreeneut aria Egrthor actit n on be$&1i oC;a$1
necessary,- Rpveyor,.tbere st- current1y twentyj
In ftIth .p yDOflt As,ovtrdue. :A su ary i 1tboitj
ottachcd to this ‘ne*6rmn&u* :
-------
C’) :r, t t t i Lt.
t r tort tc cc i! t . :‘e -e’ o: r.. r
roci an q, ti ciei’c Jeitt. on t e Oer j deter rence
cre terj iy ) ce fJI L eac, t3 w’. or the ca eu we cogecuee.
case bf n ectl t1 it e cntiaj that every
t rtort oe nacle to oiiect debt. Only n tnis mar.ner can
the nteqrity O cur COtorceaont program.
Eor the paat several ye ira, ye have been informing your
Reports and Account ng Section oX eac! debt in order to assure
tlie.Lr proper billing, pOsting. and c ollection. However, at a
recent neetirig betveen our staffs,, it became clear that current
procedures were not adequate. i ortunat.1y, .L believe many of
tne prQble s c u be easily corrected by establishing procedures
to pr )ces8 rzd collect tue debts.
I ‘icgest thctt our otf& es adopt procedurez to e ta l h
an account ror eaci debt and onutor its status until die—
a ged. In preii inciry meetings between our staffs, it was
agreed that ye s :oul dc’.-elop a eeorendu ot understanding.
i are t i ’ attac ed ror your coaments.
In addLt .on. .1 understand tnat the agency is authorized
to reter this type of debt to private collection agencieer I
understand that your office is currently eetebii.tiing pr 9 i. .
dures to i uplenemt their use. Thx is an Ideal way to pursue
ielinquent accountn, ‘therefore, I strongly support promulçatlon
ox the neceusary proceduren as soon as possible.
.1 have apDolnted Richard ?riedi an, an attorney on my staff,
to worj on this matter. After you nave had a c anceto review
the iesues and our proposed no orandum ox understanding, 1
suggest we hcive a eeet ng to vor out any probleas. Please;
have soneone on your staff contact Hr. ?niedaan at 382—2940
with any comments and to schedule a meeting. Thank you for
your attention to this matter.
Attachment
cc: Hare ft. Hil2son, ‘OSb
Ray J . Spears, Claims Officer
Larry Aebter, FMD
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Attachment 1
SUMMARY OF OVERDUE DEBTS
ATTORNEY RESPONDENT FOSD#
DATE DATE AMOUNT
ANT.
NOW
FRIEDMAN HARLOD MILES 2425
7/86 9/86 $1,000
$5,000
A&A FUEL 2386
2394
SEE BELOW - COMBINED STLMT.
8/86 10/86 1,875
3,750
BENNETT HERBERT BEAN’S GULF 1759
(ROSENBERG)
SANTERO PETROLEUM 1826
12/84 2/86 5,500
5/85 8/85 3,000
10,000
5,000
J & T SERVICE 1821
6/86 8/86 - 1,200
5,400
116 W. SERV. STAT. INC 2274
5/86 6/86 1,200
6,000
COUNTY BUS LINES 2487
8/86 9/86 1,160
5,800
TONI LYNN ASSO. 1825
4/85 5/85 600
1,000
ANDERSON GIBRALTER FENCE 1890
8/86 8/86 1,250
6,100
ERWIN’S CAR CARE 1870
2/85 2/84 300
1,400
ANDREWS SILVEO AVELLINO 2403
(EGLESTON SQ. SCOTT)
8/86 9/86 1,335
4,450
.
U GOTT CORP 2150
8/86
6,500
II BARRY GOLD (EZ GAS) 2171
3/86
950
U DEVERAUX SUNOCO 2193
3/86
2,000
ADAIR/ JOSE ARMANDO JUAREZ 2212
(LOEB)
12/85
600
-
MEADE HIGHT SALES & SERVICE 2056
1/86
1,450
GAS CASH (RIGGO & SONS)2388
5/86
1,450
KROL’S MARATHON 2159
3/86
1,000
PETROLEUM MARKETING
CO OF GEORGIA 2396
9/86 11/86 1,400
1,600
BOLAND MARVIN WALDKOETTER 2404
6/86 8/86 500
1,000
I’ YUEN CORPORATION 966
11/84 12/84 1,200
1,200
GRAHAM A. BERRY (SW OIL) 2469
10/86 12/86 1,220
6,100
1 0/86
4/86
4/86
12/85
1,300
190
400
125
3/86
7/86
4/86
600
300
200
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-
a
•— .: —
ATTACHMENT 2
MEMORANDUM OF UNDERS’TANDING
BETWEEN FIELD OPERATIONS AND SUPPORT DIVISION (FOSD),
FINANCIAL MANAGEMENT DIVISION (FMD),
AND THE CLAIMS OFFICER --
CONCERNING BILLING, POSTING AND COLLECTION OF DEBTS
OWED EPA PURSUANT TO FOSD SETTLEMENT AGREEMENTS
The p irpose of this memorandum of understanding between
the Field Operations and Support Division (FOSD), Financial.
Management Division (FMD), and the Claims Officer is to estab-
lish and implement procedures for the billing, posting and
collection of debts owed EPA pursuant to FOSD settlement
agreements.
The Field Operations and Support Division is charged
with enforcement of Sections 203 and 211 of the Clean Air
Act, dealing, in part, with regulation of motor vehicle fuels
and emissions control part tampering. Violation of these
provisions subject violators to substantial civil penalties.
Before bringing an action against a violator in federal
district court, FOSD attempts to resolve the matter informally
through a settlement agreement between the respondent and
EPA. If FOSD is successful in reaching a settlement, a settle-
ment agreement, in the nature of a contract, is executed that
requires the respondent to pay money to EPA. These debts,
due EPA, are the subject of this memorandum of understanding.
FOSD, FMD, and the Claims Officer agree that it is
essential to make every effort to collect debts owed to EPA
pursuant to settlement agreements obtained by FOSD.
Under this memorandum FOSD, FMD, and the Claims Officer
have the following responsibilities:
FOSD
Upon execution of a settlement agreement in which any
money is due EPA:
1. FOSD shall forward to the respondent via certified
mail, return receipt requested, a copy of the executed settle-
ment agreement together with a cover letter demanding payment -
of the debt and an invoice for the amounts due EPA.
2. Concurrent with its forwarding the executed agreement
to the respondent, FOSD shall forward a copy of the agreement,
cover letter, invoice, and any correspondence between the
respondent and EPA that occurred after execution of the agree-
ment, together with a cover memorandum to FMD.
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—2—
3. After the case has been forwarded to FMD, FOSD shall
avoid contact with a respondent for the purpose of collecting
the civil penalty amount. All inquiries and correspondence
from the respondent concerning the penalty shall be directed
to FMD or the Claims Officer. It is agreed however, that
FOSD may discuss other matters with the respondent, such as
performance of non-cash penalty terms of the agreement, and
monitoring compliance with the agreement or law.
4. FOSD agreements regularly provide that if the penalty
is not paid on time or if the credit project is not performed
as required by the agreement, the respondent i.s liable for an
additional penalty amount. This amount is in the nature of a
confession of judgment for a stipulated penalty. The amount
shall be referred to in this memorandum as the accelerated
penalty amount.
5. FOSD agreements regularly include requirements that
the respondent perform duties in addition to the payment of a
money penalty to EPA. It is the responsibility of FOSD to
monitor the performance of these ucredit projects.N In those
cases where the non—performance of the credit proj’ect is a
breach of the agreement that triggers the payment of the
accelerated penalty amount to EPA, FOSD shall notify FMD of
the respondent’s failure to perform within 30 days of the
credit project’s due date.
6. FOSD reserves the right to refer any ‘case in which
the respondent breaches the requirements of the settlement
agreement or fails to fully comply with the terms of the
settlement agreement to the Department of Justice for prosecu-
tion or collection. FOSD shall notify FMD in ‘writing of its
intention to pursue a case in this manner prior to FMD forwar-
ding the matter to a private collection agency. FOSD shall
obtain the concurrence of FMD and the Claims Officer in such
cases before making the referral to the Department of Justice.
FMD
1. Upon receipt of any settlement agreement by FOSD,
FMD shall establish an account receivable.
2. FMD shall monitor the collection of each FOSD account
receivable. Upon the due date of any account not paid, PHD
shall send a notice to the respondent demanding payment of
the accelerated payment amount less any payments made, plus
interest, administrative expenses and penalties.
-------
—3-.
3. Regardless of whether the civil penalty has been
paid, if FMD receives written notice from FOSD that respondent
has not performed pursuant to th. “credit project” or other
provision of the agreement, FMD shall send a notice to respon-
dent demanding the accelerated payment amount less any payment
made, plus interest, administrative expenses and penalties. -
4. As a matter of discretion, FMD may accept as payment
in full, payment of the original amount due, which is received
no later than 15 days after the due date. After the 15 day
“grace period” has expired, FMD may only consider payment of
the accelerated payment amount as payment in full.
5. Thirty days after FMD sends its first notice to
respondent, if the debt is not yet paid in full, FMD shall
send its second notice to respondent.
6. EPA rules allow FMD authority to compromise any debt
of $6,000 or less. In any case, before FMD will accept any
amount less than the full amount due as settlement of the
debt (other tflen that allowed under paragraph 4 above), FMD
shall obtain FOSD concurrence.
7. If a respondent fails’ to either pay its debt, or
enter into good faith negotiationi with FMD concerning payment
of the debt, within 30 day’s of FMD’s mailing of the second
notice, FMD shall refer the debt for collection to either a
private collection agency pursuant to EPA procedure and policy,
or to the Claims Officer.
8. FMD shall provide a monthly report to FOSD stating
the status Of all unpaid accounts and accounts paid that
month. In addition, FMD shall forward to FOSD, at least once
every month, copies of all correspondence relating to all
FOSD collectab] .es.
The Claims Officer
1. Upon receipt of an FOSD collectable referral from
either a private collection agency or FMD, the Claims Officer
shall determine whether to refer the debt to the Department
of Justice for collection or to administratively resolve the
debt.
2. Under EPA rules and policy, the Claims Officer has
the authority to compromise debts wh ch do not exceed $20,000.
In any case, the Claims Officer agrees to obtain the concur-
rence of FOSD before writing—off or compromising any debt.
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—4—
3. The Claims Officer shall provide a monthly report to
FOSD and FMD stating the status of all unresolved accounts
and accounts resolved that month. In,’addition, the Claims
Officer shall forward to FOSD copies of all correspondence
relating to FOSD collectables.
THE FOLLOWING AGREE TO THIS MEMORANDUM OF UNDERSTANDING:
______________________________________ DATE:
Richard G. Kozlowski, Director
Field Operations And Support Division
_____________________________________ DATE:
Vincette L. Goerl, Director
Financial Management Division
______________________________________ DATE:
Ray E. Spears
Claims Officer
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BILL FOR COLLECTION
BILl. NO.
BUREAU/OFFICE FOR REMITTANCE PAYABLE -
USEPA, CJg .A 3 .f r A(#A1: occ: .
ADDRESS FOR NAILING PAYMENT
DATE
,
AMOUNT OF PAYMENT
pv-’ ?if4sbijr 3 h , Pi’ i 2Si
-
PAYER
F— t. DETAOI AND RETURN
A THISPARTOF BILL
WITH REMITTANCE.
L
DATE
DESCRIPTION
UNIT PRICE
AMOUNT
)UANTTr
r
, cie.
G,qJ 0
t P 4 ..i Øe
re “ it ‘iTr
L.1 l
S e 1-s,
# TraT;. ’
r@.e.rn r + IbSA
o( ’L. or or A
o,t / r
oc P t 3rc.pJ. A • +.LQ.
p444. oi .##t-r
r 1 ” ; 1-eJe r, 7P
erf.,,
to
‘PA
I
A
IMPOf 1TAKT: A r çt will be ed tot all rcm ttaj and for all other when requne i
u. Fsllerc to ier a rccnpt for th nymcnt thould be wotnpdy reported to the benou or office thown abo,v.
AMO(U.T OUE
$ -

-
A For., O6.4 (I 73l REP%.AC S FO .IO4O WHIOl Is O LETE.
, - r
ORIGINAL BlUiNG
-------
.10
___ •1
,1j
\
UNiTED STATES ENViRON ME.’ (TAL PROTECTION AGENCY
WA. HThIGTON, D.C. D46O
f1ZMORAN UM
SVBJECT:
Transmittal for coLlection of debt
negotiated settlement agreement
o.vl 0 ,
L1 AND IA ’1*11O
due EPA inder
TO:
George E. Lawrence. Jr., Chief
Eastern Field Office I
Larry A ter , Quef
Reports and Accounting Section
Mail Code PM 226, Room 3407
3y the term. of the attached negotiated settlement
agreement, the following debt is due to EPA. It is being
transmitted to your office for collection. Pleas. inform the
named EPA attorney when the debt is paid, by sending a copy
of the payment check. Thank you.
SETTLEMENT AGREEMENT
EPA ATTORNEY
FQ5L numoeri
(dat. of agreement)
(nams)
(telephon. number)
DEBTOR
DE3WR’S ATTORNEY
(address)
(name)
(address)
(teLept OUe no.)
PAY! ? (S) DUE
te .epnon. no.
(a unt)
(data I
(amount)
(date)
(a unt)
(date)
(a. unt)
pAyMZ F DUE IN CASE OF DEFAULT
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Section J Document 7
Enforcement Po’icy for Afterniarket Cata YtiC
Converter Violations
12122/88
7
-------
(2/Z fr
MEMORANDUM
SUBJECT: Enforcement Policy for Aftermarket Catalytic
Converter Violations
FROM: Marc R. Hulison, Chief
Investigations and Enforcement Branch
TO: Investigations and Enforcement Branch
This memorandum supersedes my earlier memo of
October 11, 1988, regarding enforcement policy for aftermarket
catalytic converter installations.
Afterniarket catalytic converter (AMCC) warranty cards are
eceived from catalyst manufacturers each six months. Each
ix months, these cards go through an initial screening for
possible violations. This screening selects those warranty cards
involving 1981 or newer vehicles (for some foreign manufacturers,
1979 and 1980 vehicles are also included) receiving an oxidation
(two—way) converter, and vehicles under five years and 50,000
miles (5/50) receiving any aftermarket catalyst.
Only some of the screened warranty cards contain actual
violations, however, making an additional level of review
necessary. Certain 1981 and newer vehicles are certified to
use two—way converters, so that installation of a two—way
converter on these vehicles is proper. Such vehicles should
be eliminated from thpse selected in the initial screening by
noting their absencé ’from the list attached to this memorandum
of vehicles which use only three—way converters . Thus, the use
of a two—way convert,er on only those vehicles included on this
list would be a mis application violation. The list requires, for
some vehicles, information which is not included on the warranty
cards, such as engine size or engine family. For these vehicles,
the vehicle owner should be contacted and asked for the additional
information, to determine if the vehicle is included on the list
and constitutes a misapplication.
For vehicles which are under 5/50, the proper (i.e.,
three—way where appropriate) aftermarket catalyst may be
:istalled if the vehicle was taken to the regulated party
-------
—2—
without a converter, or if a state or local inspection program
determined the existing converter had been lead—poisoned or
damaged or otherwise needed replacing. For this reason, for
vehicles which are under 5/50 which have had the proper
converter installed, the vehicle owner should be contacted to
determine the circumstances under which the AMCC was installed.
If one of the conditions described above was present, the vehicle
should be eliminated as a misapplication.
The treatment which a misapplication receives depends
upon the number of misa pplications for a particular facility.
For facilities which have five or more misapplications, an
NOV should be issued for $1,000 per violation. For facilities
which have three or four misapplications, the misapplications
should be retained in each field office section and included
with subsequent warranty card submissions. If a facility has
misapplications in a later submission which, when added to
violations from a previous submission equal five or more, then
an NOV should be issued.
Misappliçations from facilities which have one or two
misapplications in a particular submission should be disregarded
or NOV purposes. For such misapplications in the “one or two”
ategory, the repair facility may be sent a non—prosecution
Letter and the vehicle owner an informational letter regarding
the misapplication. Instructions regarding whether such letters
should be sent and, if so their content, will be supplied later.
Where misapplications are discovered for a facility with an
outstanding or prior NOV 1 these should be pursued as violations,
regardless of the number of the misapplications. Where the NOV
is still outstanding, a settlement agreement resolving all the
violations may be appropriate. If necessary, a subsequent NOV
should be issued. -
Following issuance of an NOV 1 the violator should of course
be given an opportunity to explain any alleged violations.
For example, if the repair facility can demonstrate that a mis-
application was the result of erroneous instructions in the
aftermarket catalyst catalogue, such a violation should probably
be dropped. A similar result would follow if the facility can
show the information entered on the warranty card is incorrect
(vehicle information or catalyst part number).
Mitigation for correcting the violation is appropriate in
aftermarket catalyst cases. In order to receive such mitigation,
the repair facility should be required to contact the owner of
each vehicle in violation and offer to install, at no cost to the
- j)wner, the proper aftermarket catalyst (or new original equipment
atalyst in the case of a 5/50 violation). The attorney should
Tollow normal FOSD practice to confirm that any vehicle owner
contacts and catalyst replacements actually occurred. This would
normally consist c f a statement from the repair facility and
checking with some vehicle owners.
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—3—
Aftermarket catalyst misapplication violattons which are
documented not as a result of warranty cards (e.g., by
inspectors in the field) should be pursued as violations
regardless of the number of violations found. That is, such
violations are not subject to the “five or greater” rule
discussed above.
Attachment
Prepared by: RAckerman:pl:FOSD:1 22 O 88
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VEHICLES WITH ONLY THREE-WAY OR DUAL BED CONVERTERS
Model
ManufactUr Year(s) Models
General Motors : (Buick, Chevrolet, Oldsmobile, Pontiac,
Caddilac, GMC, GEO)
Passenger Cars - 1981 — present All
Light Trucks - 1983 — 1986 All that have emission
label “ORC”
1987 All except 2.SL engines
1988 — present All
Chrysler : (Chrysler, Dodge, Plymouth)
Passenger Cars - 1981 - 1982 All Imperials; New Yorkers
and Newports with 5.2L—
4 Bb 1
(V4 in engine code)
1982 All Omnis; all Horizons;
Turismos with 1.7L engines
1983 Cordoba, New Yorker, Fifth
Avenue, Omni, Horizon,
Imperial, ARies, Reliant,
Town & Country, Turismo
models with l.7L, 2.2L, or
5.2L engines
1984 All, except New Yorkers
with 2.6L (Cal) engines
1985 - present All
Light Trucks — 1983 - 1985 Cal models with 2.2L & 5.2L
engine
1985 — 1986 Cal and Hi-Alt models with
2.2L & 5.2L engines; Fed
model with 3.9L engine
1987 Models with 2.2L engines
(except mini vans); Hi-Alt
and Cal models with 3.9L,
5.2L engines; and models
with 2.5L, 3.OL engine
1988 All, except 5.9L (Fed)
1989 — present All
-------
—2—
Models
Cal Concord, Eagle and
Spirit with 151CID and
25C1D engines
Cherokee, CJ—5/7, Concord
Eagle, J—10, Spirit nodels
with CAN151T2FC12,
CAM151T2FC46, CAM258T2HEB4,
and CAH258V21-1E50 engine
faini les
All, except Cherokee,
CJ-5, J-20 with
DAM151T2ABCO and
DAN36OT2AAX8 engine
families
All, except Chereokee, XJ,
Comanche Fed models with
2.8L engines
All
All
All
All, except diesel engines
for 4,000, 5,000, 4000S
and 5000S models
BMW
Ferrari
Fiat
Honda
Ryundai
Infiniti
1980
1985
1981
1984
1985
1986
1990
- present
— present
— 1982
- present
— present
— present
Model
Year(s )
1981
1982
1983
1984 — 1986
Manufacturer
M C/JeeP/Eagl e
Acura
Audi
1987
1986
1984
1981
— present
- present
— present
— 1983
All
All
All
All, except 1.3L engine
All
All
All
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—3—
Model
ManufaCtUre Year(s) Models
Iguzu
Passenger Cars - 1982 - present All I-Mark and Impulse
Light Trucks - 1988 - present All
aaquar 1979 — 1982 Some XJ6 models
1983 — 1988 All
1989 XJ6 & XJS models
1990 — present All
Lamborghifli 1987 - present Countach only
Lexus 1990 - present ES250 & LS400 models
Lotus 1985 - present Esprit Turbo
Maserati 1985 - 1987 Biturbo only
1988 2.2L only
1989 2.8L only
1990 — present 222E & 228 only
Mazda
Passenger Cars — 1981 - 1982 RX—7
- 1983 - present All
Light Trucks - 1983 - present All
Mercedes Benz 1980 - present All
Mitsubishi
Passenger Cars — 1983 Starion.
1984 Starion, Colt, Cordia,
Tredia
1985 - present All
Light Trucks - 1984 - present All
-------
-.4 —
Model
Manufacturer Year(s) Models
Nissan/Datsun
Passenger Cars - 1982 Maxima & 280ZX
1983 2BOZX, Maxima, Sentra,
Pulsar (Cal)
1984 — present All
Light Trucks - 1985 - present All
Peugot 1982 - present All
Porsche 1979 924 & 928 only
1980 — 1985 911 only
1986 All, except 928
1987 - present All
Renault 1980 All Cal models except LeCar
1981 - 1983 All models except LeCar
1984 — 1988 All
Rolls Royce 1985 - present All
Rover 1980 3500 model only
Saab 1979 — present All
Subaru 1981 — 1982 All
1983 2wd only (Fed)
1984 All, except Turbo charged
models
1985 All, except 4wd Brat &
carbureted sedan & wagan
4wd (Fed)
1986 - present All
-------
—5—
Model
Manufacturer Year(s) Models
Suzuki 1984 — present All’, except 1987 Turbo
Sprint (sold under GM)
Toyota
Passenger Cars - 1980 Cressida & Supra only
1981 — 1982 All, except Tercel &
Starlet
1983 - present All
Light Trucks - 1983 - 1984 Land Cruiser only
1985 2.OL & 2.4L, 116 HP (Fed)
engines
1986 — 1987 All, except some 1O3HP
engines. Refer to
emissions label
1988 — 1989 All, except 1O2HP engines
1990 - present All
Triumph 1980 TR—7 & TR-8 Fuel Injected
only
198]. All
VolksvacTon
- Passenger Cars — 1981 — 1983 All
1984 All except Rabbits with
EVW1.7VIFAB8 engine
family
Light Trucks 1985 - present All
1985 - present Vanagan
-------
—6—
Model
ManufactUr Year(s) Models
Volvo 1979 6-cylnider
1980 - present All
Yugo 1986 — 1987 All
1988 GV model
1989 - present All
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Section J Document 8
Volatility Civil Penalty Policy B
1 2/01/89
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12 A 2 ’ 4
tC
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
_____ WASHINGTON, D.C. 20460
%_ _,
‘ L pgO
OFFICE OF
DEC — I AIR AND RADIATION
MEMORANDUM
SUBJECT: Volatility Civil Penalty Policy
FROM: Marc R. Hillson, Acting Director d4 fl . 1/ ’
Field Operations and Support Division
TO: Field Operations and Support Division Personnel
I. INTRODUCTION
This memorandum describes the Field Operations and Support
Division’s (FOSD) policy for determining penalties for violations
of the volatility regulations for gasoline and alcohol blends.
See 40 CFR sections 80.27 and 80.28 and Appendices D, E, and F
(promulgated at 54 FR 11868 (March 22, 1989) and modified at 54
FR 27016 (June 27, 1989) and 54 FR 33218 (August 14, 1989)).1
The policy follows the guidelines of the Agency’s Policy on Civil
Penalties and A Framework for Statute—Specific Approaches to
Penalty Assessments (EPA General Enforcement Policies # GM - 21
and 22) (the “EPA Policy”).
Parties covered by these regulations include refiners,
importers, alcohol blenders, carriers, resellers, distributors,
retailers, and wholesale purchaser-consumers.
II. OVERVIEW
A. The Framework of the EPA Policy
The EPA Policy establishes deterrence as the primary goal of
penalty assessment. In addition, it recognizes that penalty
assessment should provide for fair and equitable treatment of the
1 These regulations establish phase I volatility standards
effective starting in 1989. The Agency has also proposed phase II
standards to be effective starting in 1992. g 52 FR 31274,
31315-6 (August 19, 1987). EPA expects to finalize these phase II
standards soon; and reserves the right to modify this penalty
policy to account for any relevant differences between such
standards and the phase I standards (e.g., different economic
benefits of violations).
1
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2
regulated Community and for swift resolution of environmental
problems. -
The EPA Policy specifies that penalties s iould be es-
tablished and adjusted based upon a number of factors,including
the gravity of the violation and economic benefit to the viola-
tor; the Violator’s degree of cooperation and willfulness, his-
tory of noncompliance and ability to pay; and other factors
unique to the case. Under the EPA Policy, penalties are set by
first calculating the “initial penalty target figure” (the pen-
alty assessed in the Notice of Violation (NOV)), which is based
upon those factors which are appropriate for consideration prior
to the beginning of case negotiations. Each of the above factors
may be considered during case negotiations, which yields the
“adjusted penalty target figure” - the Agency’s final settlement
figure. The EPA Policy also provides that penalties may be
adjusted to reflect environmentally beneficial expenditures made
by a violator in lieu of more severe penalties.
B. General Application of the EPA Policy to
Volatility Regulations
FOSD prosecutes violations of the volatility regulations by
issuing a Notice of Violation which includes a proposed penalty.
The proposed penalty is analogous to the initial penalty target
figure under the EPA Policy. Following issuance of the NOV,
settlement negotiations are conducted with the violator to reach
a final settled penalty. The final settled penalty is analogous
to the adjusted penalty target figure under EPA Policy. If no
settlement is reached, the case normally is referred to the De-
partment of Justice, where additional settlement negotiations may
take place. Complaints filed by the Department of Justice in
court generally seek the statutory penalty.
The proposed penalty for volatility violations is based
upon the gravity of the violation, adjusted for prior violations
and, in certain cases, for business size. Following initiation
of the enforcement action, the proposed penalty may be reduced up
to forty pszcent based upon the following factors: actions taken
by the violator both to remedy the violation and insure future
violations viii not occur; and the violator’s degree of coopera-
tion in ths investigation and in settlement negotiations. Un-
limited adjustments are possible for financial hardship and spe-
cial circumstances. FOSD also allows violators to resolve a
portion of the proposed penalty by making certain types of en-
vironmentally beneficial expenditures.
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3
III. CALCULATING THE PROPOSED PENALTY
The proposed penalty for volatility violations is based upon
the magnitude of the violation (the number of gallons of gasoline
which are in violation) and the severity of the violation (the
degree to which the gasoline exceeds the appropriate standard),
adjusted for prior violations. For certain cases where the mag-
nitude of the violation is not known or where the penalty calcu-
lated based upon the violation’s magnitude is not sufficiently
large to constitute an appropriate deterrent (generally for vio-
lations found at retail outlets and wholesale purchaser—consumer
facilities), the penalty is derived from a table which takes into
account the severity of the violation, the history of prior vio-
lations, and the violator’s business size.
A. Gravity of the Violation
Since the reduction of fuel volatility is a crucial com-
ponent of the Agency’s effort to control and prevent excess vola-
tile organic compounds, all violations of the regulations will be
considered serious. The severity of the violation will be. a
function of the amount by which the volatility of the fuel (mea-
sured in pounds per square inch) exceeds the standard. Thus, the
larger the excess over the standard, the greater will be the
environmental harm. This will also include any violations of
section 80.27(d), which covers the alcohol blends having a one
pound per square inch additional allowance.
B. History of Prior Violations
As provided in the EPA Policy, this policy provides higher
penalties for companies with a history of prior violations of the
volatility regulations. For the purposes of this policy, prior
violations include any NOV resolved where the case was not drop-
ped, or any judicial resolution where there was not a dismissal
or judgment in favor f the defendant. Previous violations will
include any violation of the regulations by a particular company,
regardless of the EPA region in which it occurred.
C. Business Size of the Violator
Penalties under this policy are generally calculated based
upon the number of gallons of gasoline in violation. As a re-
sult, a specific adjustment to reflect the size of the violator’s
business is generally not necessary. A penalty which LS exactly
proportional to the magnitude of the violation is appropriate in
most cases, and need not be adjusted for the size of the viola-
tor’s business.
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4
In those cases where the penalty is derived from a penalty
table which does not reflect the gallons in violation (normal—ly
for violations found at retail outlets or wholesale purchaser-
consumer facilities), penalties are different for different-sized
businesses. These distinctions are appropriate because the busi-
ness size of potential violators may range from very small
businesses to major national corporations, and the appropriate
level of deterrence will differ. For the purposes of this polic-
y, the size of a business entity is expressed in terms of the
violator’s gross income (i.e., total business revenues from the
business entity which gave rise to the violation) for the prior
fiscal year. When the violator is an individual, size is ex-
pressed in terms of the individual’s gross income from the prior
fiscal year. Where the prior fiscal year is not representative
of the violator’s historical business size, revenues or income
from the prior three to five years should be evaluated.
D. Penalty Formula -
Penalties are calculated in a manner which removes the eco-
nomic benefit the violator may have received from violating the
volatility regulations, and in addition, includes a deterrent to
discourage other violations. This policy assigns the amounts of
economic benefit which are appropriate for different levels of
noncompliance (Table 1). The amount of these benefits are based
upon analyses which were carried out as part of the regulatory
impact analysis for the volatility regulations.
Table 1. Economic benefit resulting from the
production of gasoline which ex-
ceeds the volatility standards.
Amount Standard Assigned Economic Benefit Value
Exceeded (per gallon of noncomplying gasoline)
o to 0.5 psi $.0l
0.5 to 1.0 psi $02
1.0 to 2.0 psi $.03
over 3.0 psi $.04
The economic benefit component (EBC) of the proposed p .. alty
is calculated by multiplying the number of gallons of gasoline
which are in violation by the appropriate economic benefit value
from Table 1. Except as described below, the gravity component
(GC) is equal to the economic benefit component. The proposed
penalty (PP) is equal to the sum of the economic benefit and the
gravity component. Thus, the proposed penalty is calculated
using the following formula:
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5
PP EBC + GC
In order to reflect the history of violations, the gravity com-
ponent wifl be increased for cases where the violator has a his-
tory of prior violations. Thus, the formula for calculating the
proposed penalty for a violator who has a history of prior viola-
tions is as follows:
Number of Prior Violations Yormula
1 PP = EBC + (GC * 1.5)
2 PP EBC + (GC * 2.0)
3 PP = EBC + (GC * 30)
In certain cases, the number of gallons of gasoline in vio-
lation will be so small that the penalty calculated as described
above will not constitute a sufficient deterrent to achieve the
goals of the volatility regulations. For this reason, minimum
proposed penalties are provided in this policy (see Table 2).
The penalties from Table 2 should be used when the penalty calcu-
lated as described above is less than the penalty derived from
Table 2. In other words, the proposed penalty should be the
areater of the calculated penalty and the penalty from Table 2.
Section 211(d) of the Clean Air Act provides for a mandatory
forfeiture of $10,000 per day of violation. Thus, any penalty
calculated under this policy may not exceed $10,000 per day of
violation. Where the calculated penalty amount exceeds $10,000,
there must be a reasonable basis that there were an appropriate
number of violations and/or that the violation occurred for the
appropriate number of days (e.g., at least three violations
and/or three days of violation for a $30,000 proposed penalty).
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6
Table 2. Minimum penalty amounts for vola-
tility violations adjusted
for business size, gravity of the
violation, and number of prior
violations.
Number of
Prior Violations
0
1
2
3
0
1
2
3
0
1
2
3
I
$1,000
1,300
1,750
2,000
1,500
2,000
2, 500
3 , 000
3,000
4,000
6,500
8,500
Business Size
II
$1,500
1,900
3,000
4,000
2,250;
3,000
4,000
5,500
4,500
6,000
8,000
9,250
III
$3,000
4,000
5,500
7,000
8,000
9,000
10,000
10,000
Size I
Size II
Size III
0 to $1,000,000
$1,000,000 to $10,000,000
$10,000,000 and greater.
Exceed Standard by 0 to 0.5 psi
Exceed Standard by 0.51 to 1.0 psi
Exceed Standard by 1.1 to 2.0 psi
0
1
2
3
6,000
8,000
8,500
10,000
2,000
3,000
4,000
6,000
4,000
6,000
7,500
Exceed Standa J by more than 2.0 p i
Size of buainess categories as defined for this policy are:
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7
E. Violations Caused by Mislabeling
The regulations allow an additional 1.0 psi- RVP for ethanol
blends under certain conditions. These conditions are: the gas-
oline must contain at least 9.0% ethanol (also, the concentration
in unleaded gasoline may not exceed 10.0%); the pump stand from
which the gasoline is dispensed must be labeled as containing
ethanol and with the ethanol concentration; and each document
which accompanies the gasoline (e.g., invoices, loading tickets,
etc.) must contain a statement that the product contains ethanol.
See 40 CFR section 80.27(d).
If a pump stand or accompanying document is not labeled in
accordance with the regulations, the ethanol blend must meet the
RVP standard applicable to gasoline (e.g., 9.0 psi in a Class A
area). If this standard is exceeded, there is a violation of the
volatility regulations. -
EPA will treat as a special type of violation the situation
where an ethanol blend would have been entitled to the additional
1.0 psi allowance (and would have met the applicable RVP standard
which included this allowance) if it had satisfied the ethanol
labeling requirements. In instances where such a violation caus-
ed by mislabeling does not lead to a subsequent violation, this
policy establishes a penalty of $300 for such violations. This
penalty will be applied for each retail outlet or wholesale
purchaser-consumer facility having one -or more pump stand not
properly labeled (and not separately for each pump stand), or
each load of gasoline delivered without the proper document
statements. EPA will not adjust the penalty for violations
caused by mislabeling as discussed in the next section, except
under extraordinary circumstances. This policy will not apply to
upstream parties, retail outlets or wholesale purchaser—consumer
facilities which have had prior violations of this type. -
IV. ADJUSTMENTS TO THE PROPOSED PENALTY -
The EPA policy specifies that penalties should be evaluated
for adjust nt based upon degree of cooperation/noncooperation,
ability to pay and other unique factors specific to the case.
This policy provides for these adjustments. Violators bear the
burden of justifying any adjustments in their favor. When the
penalty formula is used for the NOV amount, the adjustments only
should apply to the gravity component, and not to the economic
benefit component.
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8
A. Degree of Cooperation/Noncàoperation and
Actions to Remedy the Violation
This policy allows mitigation of the propbsed penalty of up
to forty percent as an incentive for the violator to cooperate in
the investigation and negotiations, and to correct the violation
promptly. The greatest mitigation should be given where the vio-
lator.cooperates fully and corrects all violations immediately
upon discovery by the violator. In general, the earlier and more
complete the cooperation and corrective action, the larger the
penalty reduction which is appropriate.
For volatility violations, correction generally means
capturing the noncomplying gasoline and either storing it until
the end of the control period, rerouting it to an area where it
would be in compliance, or reblending the gasoline so that it
comes into compliance with the appropriate volatility standard.
This action should also include implementing a procedure to pre-
vent such violations from occurring in the future, if such a pro-
cedure is not already in place. The degree of penalty mitigation
will be related to the extent to which the violation, and the
conditions which caused the violation, are corrected.
The violator’s cooperation during the investigation,
negotiation and settlement phases of a case may result in a pen-
alty adjustment. A violator is expected to provide access to
records and premises and to not interfere with the investigation.
In addition, the violator should identify and provide information
about other parties who were involved in the volatility vio-
lation. Failure to cooperate in an investigation, attempting to
hide records or evidence of violations, or not cooperating in any
continuing investigation should be reflected in the adjustment
for this factor.
B. Financial Hardship Adjustment
The Agency generally will not seek penalties which are
clearly beyond the means of the violator. However, it is
important that the regulated community not view the violation of
environmental requirements as a way of aiding a financially
troubled business. Furthermore, some violations are so out-
rageous so as to render any mitigation inappropriate. For ex-
ample, it is unlikely that FOSD would reduce a penalty based upon
financial hardship where a violator refuses to correct its viola-
tion or take steps to prevent future violations. The same would
be true for a violator with a long history of previous violations
of environmental laws, or where there are indications that many
more violations exist than those alleged in the NOV. Therefore,
FOSD reserves the option, in appropriate circumstances, of not
reducing the final penalty as a result of financial hardship even
though that penalty may put a company out of business.
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9
A financial hardship claim normally will require a
significant amount of financial information from the violator.
The burden of demonstrating inability to pay, -like all mitigating
factors, rests on the violator. If the violator fails to provide
sufficient information in a timely manner, then the prosecution
team cannot give full consideration to this factor.
Where a financial hardship claim is adequately established,
FOSD may, at its discretion and based upon its review of all the
equities of the case, including the financial hardship, further
adjust the penalty. The preferred approach to such an adjustment
is allowing a delayed payment schedule, or granting an unusually
favorable alternative payments package. However, as a last re—
sort, FOSD may agree to an extraordinary penalty reduction for
this factor.
A case may arise in which equity cannot be served by adjust-
ing the penalty within the normal limits of this policy. In such
a case, FOSD may grant extraordinary mitigation. The burden of
establishing the need for extraordinary adjustment of the penalty
rests on the violator. In order to meet this burden, the vio-
lator must present evidence of: (1) the facts of the case; (2)
why the adjusted penalty is inequitable; (3) why the criteria for
adjustment are insufficient; and (4) how the public interest is
protected or served by an extraordinary adjustment in the penal-
ty.
V. ALTERNATIVE PAYMENTS
It is FOSD’s policy to encourage violators to resolve a
portion of their penalties by making payments to support programs
which educate the public regarding motor—vehicle-caused air pol-
lution and the laws for its control. Such credit projects en-
courage compliance with these laws, and therefore advance program
goals beyond the mere deterrent effect of paying penalties into
the federal treasury.
A credit project may take many forms. However, several
conditions gust be met in order to prevent abuse of the program.
First, no credits may be given for activities that are current
legal requirements or likely to be such in the foreseeable future
(e.g., through upcoming rulemaking). Next, the majority of the
project’s environmental benefit should accrue to the general
public rather than to the violator or any particular governmental
unit. Finally, the project may not be something which the vio-
lator could reasonably be expected to do as part of sound bus i-
- ness practices.
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10
VI. PENALTY AFTER INITIATION OF LITIGATION
When an NOV is issued and a violator fails to settle the
case, the Agency generally will refer the matter to the United
State Department of Justice (DOJ) for prosecution in federal
district court. When a case is referred to DOJ, the normal
recommendation is to prosecute for the statutory penalty of
$10,000 per day per violation.
VII. MISCELLANEOUS
The policies and procedures set out in this document are
intended solely for the guidance of governmental personnel. They
are not intended and cannot be relied upon to create any rights,
substantive or procedural, enforceable by any party in litigation
with the United States. The Agency reserves the right to act at
variance with these policies and procedures and to change them at
any time without public notice.
This policy applies to civil enforcement of the gasoline
volatility regulations and does not apply in any way to potential
criminal enforcement.
VII. PENALTY EXAMPLE CALCULATIONS
Following are examples of application of this policy to
hypothetical factual situations.
EXM PLE A.
EPA determines that a branded retail outlet dispensed 3,000
gallons of gasoline with an RVP of 10.2 psi in a geographical
area and during a regulatory control period having an applicable
standard of 9.5 psi. The gasoline, therefore, exceeded the Stan-
dard by .7 psi. The retail outlet is a Size I business and it
has no history of prior violations.
Under the penalty formula, the penalty calculations would be
as follows:
PP EBC + GC
EBC = 3,000 gals x $0.02 = $60
GC = EBC = $60
PP = $60 + $60 $120
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11
Under Table 2, the penalty amount for this retail outlet would be
$1,500. Because the penalty amount from Table 2 is larger than
the calculated penalty amount, the penalty amount from Table 2
($1,500) should be assessed against this retail outlet.
Various parties upstream from the retail outlet also may be
liable for the violation. If the retail outlet is one displaying
the corporate, trade, or brand name of a gasoline refiner or any
of its marketing subsidiaries, the refiner whose corporate,
trade, or brand name is displayed would be liable for the viola-
tion. In addition, the distributor and/or reseller, a carrier
who caused the violation, or the ethanol blender at whose ethanol
blending plant the gasoline was produced would be liable for the
violation.
In this example, because the retail outlet displayed the
brand name of a refiner, EPA may assess that refiner a penalty
under Table 2 according to its business size and history of prior
violations. If, for example, the refiner is a Size .I LI business
and it has a history of one prior violation, the calculated pen-
alty would be:
EBC = 3,000 X $0.02 = $60
GC = ($60 X 1.5) = $90
PP = $60 + $90 = $150
The penalty under Table 2 would be $5,000, however, so that this
larger penalty would apply to the refiner. The distributor, if
any, a carrier who caused the violation, or an ethanol blender
who produced the gasoline similarly may be assessed a penalty.
EXAMPLE B.
EPA detects a violation at a unbranded distributor facility
involving 1,000,000 gallons of gasoline exceeding the applicable
standard by 1.1 psi. The distributor is a Size III business and
it has no history of prior violations. Under the penalty for-
mula, the penalty calculations would be as follows:
PP = EBC + CC
EBC = 1,000,000 gals x $.03 = $30,000
GC = EBC = $30,000
PP = $30,000 + $30,000 = $60,000
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12
The calculated penalty of $60,000 is applicable in this case
because it is larger than the penalty derived from Table 2, as-
suming that there are at least six violations and/or six days of
violation.
Parties upstream from the distributor also may be deemed in
violation. If the distributor is operating under the corporate,
trade, or brand name of a gasoline refiner or any of its market-
ing subsidiaries, the refiner under whose corporate, trade, or
brand name the distributor is operating would be liable f or the
violation. If the distributor is not operating under a refiner’s
corporate, trade, or brand name, the refiner at whose refinery
the gasoline was produced, the importer at whose import facility
the gasoline was imported, or an ethanol blender at whose plant
the gasoline was produced would be liable for the violation. A
carrier who caused the violation is also deemed in violation.
In this example, because the distributor was not operating
under a refiner’s corporate, trade, or brand name, the refiner
(importer and/or ethanol blender) wh! produced the gasoline would
be liable for the penalty amount as calculated above according to
the penalty formula (because it is larger than the penalty de-
rived from Table 2). If EPA determines that a carrier caused the
violation, it would be liable for the calculated penalty amount.
EXAMPLE C
EPA detects a violation at a carrier facility involving
100,000 gallons of gasoline exceeding the applicable standard by
.4 psi. The carrier is a Size II business and it has a history
of two prior violations. The calculated penalty is as follows:
PP — EBC + (CC X 2.0)
EBC 100,000 gals x $.0i = $l 000
GC — EBC = $1,000
PP $1,000 + ($1,000 X 2.0) = $3,000
The calculated penalty is $3,000, and the penalty under
Table 2 ii $3,000 for a size II business having a history of
prior violations. The proposed penalty, therefore, would be
$3,000.
The refiner at whose refinery the gasoline was produced, the
importer at whose import facility the gasoline was imported,
and/or the ethanol blender at whose ethanol blending plant the
gasoline was produced also may be deemed in violation. For these
parties, the penalty amount in Table 2 would be applied if it
exceeds the calculated penalty of $3,000.
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13
EXAMPLE D.
EPA detects a violation at a refinery involving 3,000,000
gallons of gasoline exceeding the applicable standard by 2.1 psi.
The refiner is a Size III business and it has no history of prior
violations. The penalty calculations are as follows:
PP = EBC + CC
EBC = 3,000,000 gals x $04 $120,000
GC = EEC = $120,000
PP = $120,000 + $120,000 $240,000
This calculated penalty is larger than the penalty under Table 2
and would therefore apply, assuming that there are at least 24
violations and/or 24 days of violation.
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Section J Document 9
Aftermarket Converter Enforcement 9
and Penalty Issues
08/10/90
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cID
O S7 41
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
‘:i PRO1t
I 0 1990
OFFICE OF —
AIR AND RADIATION
MEMORANDUM
SUBJECT: Attermarket Converter Enforcement and Penalty Issues
FROM: Marc R. Hilison,
Investigations and Ent rcemen ranch
THRU: F1 l dOpOns dSUp D
TO: Investigations and Enforceke it Branch Personnel
Some new questions have arisen concerning how to apply the
attermarket converter (amc) enforcement and penalty policies in
certain circumstances. This memo will provide guidance on a f w
of the circumstances that have come up most often.
1. History of the violator——The penalty policy provides
that a previous violator be assessed a higher penalty than a
first time violator. One problem with amc violations is the lag
time between the misinstallation of the converter and the time we
become aware of the violations. It is not unusual for a
respondent to receive a notice of violation for a second batch of
violations, where the violations occurred before he received an
nov for his first batch of violations. The justification for
higher penalties for repeat violators is to punish those
regulated parties that continue to violate a.law they know they
have previously violated. Thus. where subsequent violations
occur before the violator has been informed via a notice of
violation of his initial violations, the proposed penalty for the
subsequent violations should not include a repeat increment.
2. New car dealers who cause tampering by sending warranty
eligible cars to muftler shops to have aftermarket converters
installed——The issue here is whether this type of tampering is
covered by 203(a)(3)(A) or (B). The difference is significant
because the former has a $10,000 maximum penalty, while the
latter is $2500. Although an argument can be made that the car
oealer is a co—party to the tampering, or that the muffler shop
Pnntedon Recyded Paper
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2
is the agent ot the car dealer, this approach would render the
causing language of section 203 somewhat meaningless. Instead,
we will continue to focus on the party that actually performed
the tampering to calculate the proposed penalty. In these cases,
since the tampering was performed by the muffler shop, the new
car dealer is liable only for causing 203(a)(3)(B) tampering.
The muffler shop remains liable for these same violations.
Because these violations have a greater degree of egregiousness,
the proposed penalty for new car dealers will be the statutory
maximum of $2500. In some of these cases, an economic benefit
component is present that is unusual for a tempering case when
the car dealer charges the manufacturer for an original equipment
converter, even though he has only paid the muffler shop for an
amc. The attorney should strongly weigh this factor when
considering mitigating the penalty.
3. What to do when the number of counts in a routine ainc
case drops below 5——Barring exceptional ircumstances, such as
where a field investigation discloses a failure to fill out
warranty cards, we have proceeded with amc cases only when we
have found at least five violations. The primary reason for
this, as stated in an earlier memo, is a resource one——if we
issued an nov for every amc violation, we would not have the
person—power to handle these cases. It has been suggested to me
on numerous occasions that if a violator is cited for five or
more counts and can show that he committed less than five, it is
unfair, illogical, and perhaps capricious, to require him to pay
a penalty on the remaining counts. I think this suggestion is
correct. Henceforth, for routine amc cases where the number of
actual violations drops below five, the case should be dropped,
although if additional counts turn up in subsequent reporting
periods, the dropped counts may be reinstated. Note that this
does not excuse the violator whose case is being dropped from his
duty to correct the violations.
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Section J Document 10
Proposed Policy for Enforcing the New Defeat
Device Authority with regard to Catalyst
Replacement Pipe Manufacturers and Sellers
01/02191 10
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
/ OFFICE OF
AIR AND RADIATION
January 2, 1991
MEMORANDUM
SUBJECT: Proposed Policy for Eriforcing.the New Defeat Device
Authority with regard to Catalyst Replacement Pipe
Manufacturers and Sellers.
FROM: George E. Lawrence, Jr., Chief
Eastern Field Office I
TO: Mary T. Smith, Director
Field Operations and Support Division
The 1990 Clean Air Act prohibits the manufacture, sale,
of ferin for sale and installation of emission control defeat
devices . We have investigated a company which has manufactured
catalyst replacement pipes, and a company which sold catalyst
replacement pipes. The manufacturer, MSA Company located near
Atlanta, sold approximately 500 catalyst replacement pipes since
November 15, 1990, to a total of about 20 companies. The
purchaser companies primarily were parts houses.
We also inspected a auto parts house located near Boston,
and documented two post-November 15 shipments of NSA catalyst
replacement pipes to this company, and the sale of approximately
50 catalyst replacement pipes by this company since November 15.
1 Section 203(a) of the Clean Air Act is amended to read as
follows:
(3) (B) for any person to manufacture or sell, or offer
to sell, or install, any part or component intended for
use with, or as part of, any motor vehicle or motor
- vehicle engine, where a principal effect of the part or
component is to bypass, defeat, or render inoperative
any device or element of design installed on or in a
motor vehicle ... in compliance with regulations under
this title, and where the person knows or should know
that such part or component is being offered for sale
or installed for such use or put to such use;
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proposed Enforcement Approach -
* View the post—November 15 manufacturer or sale of
replacement pipes to be the equivalent of catalyst
removal. -
Manufacturers
* Issue NOV’s for this activity, using the current
tampering penalty policy for catalyst removal, i.e.,
$1,500 per manufacturer or sale for small businesses
and $2,000 for large businesses.
* For catalyst replacement pipe manufacturers, issue NOV
for each catalyst replacement pipe manufactured and
each catalyst replacement pipe sold since November 15
(avoiding double counting).
* For parts houses where we have specific information of
the number of catalyst replacement pipes sold (e.g.,
the MA parts house we inspected, and other parts houses
we can inspect), issue the NOV for this number only and
not for catalyst replacement pipes on the shelf;
require the appropriate disposal of all unsold catalyst
replacement pipes for penalty mitigation.
Parts Houses
* For parts houses where we have evidence of the post-
November 15 purchase of catalyst replacement pipes, but
no specific evidence of sales, issue the NOV for the
number of catalyst replacement pipes purchased, but
amend the proposed penalty to reflect the number sold
if the company is able to show the number which were
not sold; require the appropriate disposal of all -
unsold catalyst replacement pipes for penalty
mitigation.
* Follow this same approach for parts houses or non—
individual which were the customers of parts houses.
Individuals
* Do n issue NOV’s to individuals who purchased
catalyst replacement pipes.
press/Publicity
* Issue a press release quickly (by 1/11 or 1/18 if
possible) announcing the enforcement actions.
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Rationale
* Catalyst replacement pipes resi ilt in catalyst removals,
which is the single most egregious form of tampering.
* We have a long history of trying to stop catalyst
replacement pipe manufacture and use; so that the
companies involved must know of our view as to the
illegality even under the old law, and the new law is
much clearer.
* It is important to send an aggressive message quickly,
in order to make the strong point that catalyst
replacement pipes are clearly in violation of the Clean
Air Act. NSA told us that they continue to view
catalyst replacement pipes as being legal even under
the new law —— strong enforcement may be necessary to
dissuade NSA and other. companies with this same
mentality of our seriousness.
* Ours is an enforcement program, and our primary
approach should be to enforce violations. Congress
established the defeat device provision to be effective
November 15, and that is as good a date as any to begin
enforcement.
* FOSD gets good marks for being the first out of the
blocks enforcing the new CAA provisions.
* The proposed approach is less aggressive than we could
be, in that we are seeking penalties from parts houses
only for catalyst replacement pipes which were actually
sold. This approach is justified because those
catalyst replacement pipes which were not sold do not
have the adverse environmental consequence of catalyst
replacement pipes which were installed on vehicles.
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Section J Document 11
Fact Sheet: Exhaust System Repair
Guidelines
NOTE: Includes cover memorandum
03/13/91
11
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i1
S1
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
pqo ’
MAR I 3 1991 OFFICE OF
AIR AND RADIATION
To whom may it concern:
As you know, the Clean Air Act was amended on November 15,
1990. Several of the changes in the Amendments affect the
automotive repair/service industry directly. These changes include
the expansion of the tampering prohibition to include private
individuals and the prohibition against the manufacture,
installation, sale or offering for sale of any part or component
used on any motor vehicle or motor vehicle engine where a principal
effect is to bypass, defeat, or render inoperative any emission
control device or element of design of any emission control system.
The enclosed Fact Sheet: Exhaust System Repair Guidelines
has been revised to conform to the new provisions of the Clean Air
Act and represents a change in our enforcement policy with rega:rd
to exhaust repair. This change is effective immediately.
Essentially, the changes in these guidelines reflect EPA’s
position that any pipe used to replace the section of exhaust where
the catalytic converter should be, would be considered illegal
under the revised Clean Air Act. Therefore, any work in this area
of the exhaust system must include proper converter replacement.
Other informational materials will be revised to reflect-the
Clean Air Act Amendments and will be distributed and made available
when they are completed. These other materials include pamphlets
on the tampering prohibition, revised engine switching fact sheet,
and possibly a revision of our enforcement policy statement
(Memorandum 1A) and/or guidance on which parts EPA considers to be
illegal.
We would appreciate you informing your employees, members
and/or associates about these changes. If there are questions or
concerns, or if you have any suggestions concerning these issues,
please let us know. Our phone number is (202) 382-2640.
Sincerely,
Field Operations and Support Division
Enclosure
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o si• 4
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
MAR 1 3 1991
OFFICE OF
AIR AND RADIATION
FACT SHEET: EXHAUST SYSTEM REPAIR GUIDELINES
The EPA has prepared this fact sheet to answer some of the
most commonly asked questions about the types of exhaust work a
repair shop can legally perform. If you need any further
information about the EPA’s tampering policy, please call (202)
382—2640.
Question 1 .
Under what conditions or circumstances can a catalytic
converter be removed from a vehicle and a converter replacement
pipe be installed?
Answer 1 .
tinder federal law, catalytic converters may not be removed
and replaced with “converter replacement pipes by any person.
The 1990 Clean Air Act Amendments even prohibit private
individuals from installing uconverter replacement pipes TM on their
own vehicles. Anyone who installs such pipes would violate section
203(a)(3)(A) and (B) of the Clean Air Act (Act).
In addition to federal law, forty-five out of the fifty
States also have statutes or regulations which prohibit tampering
with the pollution control equipment on motor vehicles or driving
or selling such vehicles. Thus, vehicle owners who tamper with
their own vehicles may be subject to substantial penalties under
both federal and State law.
The only circumstances in which a person would be allowed to
remove a converter is if the vehicle is being shipped overseas to
an area where unleaded gasoline is not generally available.
(Vehicles traveling to Canada or Mexico are eligible for this
exemption.) In this instance the vehicle owner must have a
letter from the EPA specifically authorizing the converter
removal from the vehicle in question.
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—2—
Question 2 .
Can I remove a converter from a vehicle that is used only
for “off-road” driving?
Answer 2 . No. The tampering prohibition discussed. in Answer- #1
applies to this situation as well. The federal tampering
prohibition pertains to “motor vehicles,” which are defined by
section 216(2) of the Act as “any self-propelled vehicle(s)
designed for transporting persons or property on a Street or
highway.” A light-duty vehicle manufacturer certifies an engine-
chassis configuration as meeting the applicable emissions
standards for motor vehicles manufactured in a given model year,
and it js not legal for anyone to “de-certify” a motor vehicle
for “off-road” use.
Question 3 .
A vehicle that has had its engine replaced is brought into a
muffler shop. The owner says the new engine is pre—1975 and the
vehicle no longer needs a converter. Is it tampering to remove
the converter? -
Answer 3 . Yes. Again, the tampering prohibition in Answer #1
applies. A motor vehicle must be maintained in a proper
certified engine-chassis configuration. In the case of engine
switching, the resulting engine-chassis configuration must be
identical in all material respects to one that was certified by
the manufacturer for the same model year as the chassis or newer .
It is not legal for anyone to change a vehicle into one that
matches an older configuration than was certified by the
manufacturer. Thus, removing the converter would be a violation
of the law.
Question 4 . -
If a vehicle is brought into a muffler shop with a missing
converter and a replacement pipe already installed, is it
tampering to install a new replacement pipe?
Answer 4 . Yes. Section 203(a)(3)(B) makes it illegal for any
person to sell or to install any part where a principal effect would
be to bypass, defeat, or render inoperative any device or element of
design of a vehicle’s emission control system. A principal effect
of a replacement pipe is to defeat or bypass the catalytic
converter system as it was designed by the manufacturer. It is,
therefore, a prohibited act to install a replacement pipe in any
situation. It is also a prohibited act to replace the entire
exhaust pipe without replacing the catalytic converter. In
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—3—
Idition, a repair facility should consult with the State to
termine if the State has a similar policy towards this type of
repair work or how State laws may affect tk e legality of its
actions.
Question 5 .
If a converter-equipped vehicle is brought to a muff1er shop
with the converter already removed by the owner, is it tampering
to install a section of pipe in the space left vacant by the
converter’ s removal?
Answer 5 . Yes. The installation by a muffler shop of a section
of pipe in the void left where the vehicle owner removed the
converter is considered by the Agency to be part of the act of
tampering. It is a violation of section 203(a)(3)(A) for a vehicle
owner to remove a converter from his own vehicle. Section
203(a) (3) (A) clearly prohibits all individuals from removing or
rendering inoperative any emission control device or element of
design. If a repair facility completes, assists, or participates
in aiiy W y in this act of tampering begun by someone else, it has
also acted in violation of section 203(a) (3) (A) of the Act and by
installing a defeat device has violated section 203(a) (3) (B).
“ uestton 6 .
If a converter-equipped vehicle is brought into a muffler
shop with no exhaust system past the exhaust manifold or headers,
is it tampering to install a non-stock or dual exhaust system?
Answer 6 . Yes. The answer to Question #5 applies. The repair
facility would be completing the act of tampering in this
situation by manufacturing, installing and selling an emission
control defeat device.
Question 7 .
Is it tampering to install a dual exhaust system on a vehicle
originally equipped with a single exhaust?
Answer 7 . Yes. The general rule is that a motor vehicle
emission control system (which includes the exhaust
configuration) may not be changed from an EPA certified
configuration without subjecting the repair shop to liability for
violating the federal tampering prohibition. The exhaust system
configuration, including the location of the converters, and
exhaust pipe diameter and length, are items specified by the
manufacturer because engines and some of the associated emissions
systems are generally affected by the exhaust system
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—4—
ackpressure, which subsequently affects vehicle emissions. The
installation of a dual exhaust system with tvyo converters would,
therefore, be considered tampering. The Agency will not, however,
require a repair shop to restore a vehicle which has a non-stock
dual exhaust system to a single exhaust configuration. A shop
may, therefore, replace sections of pipes on such a system,
except for that portion of the pipes where the original catalytic
converter would have been located. It would not be considered
tampering to install a dual exhaust system with two converters if
the vehicle manufacturer certified an identical engine—chassis
configuration for the vehicle model year or newer that includes
such an exhaust configuration.
question 8 .
Are there any general guidelines for muffler shops about the
kind of exhaust work that can be legally performed on a
previously tampered vehicle?
Answer 8 . As the answers to the previous questions indicate, the
Agency’s authority to enforce against tampering violations has
been greatly expanded. Individuals are now prohibited from
tampering. Repair shops, therefore, must now restore vehicles’
exhaust systems to their original catalyst configuration if they
fork on that part of the exhaust system. The Agency will not
bursue enforcement action against repair shops that perform
repairs on one part of a vehicle’s exhaust system where tampering
has occurred in another part of the system. The Agency does
require, however, that when working on a vehicle where the
catalytic converter has been removed, the repair shop must replace
the catalytic converter if the section of pipe where the original
converter should have been, needs to be replaced. This would
also include situations where the entire exhaust pipe is
replaced. Repair shops must install a catalytic converter when
replacing the entire exhaust pipe.
We urge you to approach repair work cautiously and to
consult with State officials concerning applicable State law. We
have enclosed a chart that briefly summarizes the issues
discuss d in this fact sheet for use by any repair shop.
You should also be aware of the installation requirements
applicable to aftermarket catalytic converters which comply with
our August 5, 1986 interim policy. A copy of these requirements
can be obtained by calling the phone number listed at the
beginning of this fact sheet.
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EXHAUST SYSTEM REPAIR GUIDELINES
Can the vehicle leave the shop in the following conditions?
Condition of Dual
exhaust
vehicle entering Stock exhaust Stock exhaust Dual exhaust without
shop with converter with test pipe with converters converters
Stock exhaust Yes No No No
with converter
Stock exhaust, no Yes No No No
converter, test
pipe in its place
Stock exhaust, no Yes No No No
converter, gap in
exhaust system
(no test pipe)
To exhaust system Yes - No No No
Dast manifold or
leaders
)ual non-stock Yes No Yes*** No
exhaust with no
:ori ers
)ualnon-stock Yes No Yes*** No
exhaust with
onverters
*** The Agency has exercised its enforcement discretion by not
pursuing enforcement action against facilities for this type
of repair work, although it could be considered tampering.
Please consult with State officials regarding applicable
State laws. Shops are encouraged to convince the vehicle
owner to restore the exhaust system back to its original
configuration. -
3/92.
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Section J Document 12
Engine Switching Fact Sheet
04/02/91
12
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I)’..- 1’—’
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
p it.
N’R 21*
oF ,cE OF
Ai A$D I.ADLATIOH
ENGINE SWITCHING FACT SHEET
Pursuant to frequent requests for information received by
the U.S. Environmental Protection Agency (EPA) regarding the
legality and effects of engine switching, this document will
summarize federal law and policy pertaining to this matter, and
will discuss other related issues.
A. Federal Law
The federal tampering prohibition is contained in section
203(a) (3) of the Clean Air Act (Act), 42 U.s.c. 7522(a) (3).
Section 203(a) (3) (A) of the Act prohibits any person from
removing or rendering inoperative any emission control device or
element of design installed on or in a motor vehicle or motor
vehicle engine prior to its sale and delivery to an ultimate
purchaser and prohibits any person from knowingly removing or
rendering inoperative any such device or element of design after
such sale and delivery, and the causing thereof. The maximum
civil penalty for a violation of this section by a manufacturer
or dealer is $25,000; for any other person, $2,500.
Section 203(a) (3) (B) of the Act prohibits any person from
manufacturing or selling, or offering to sell, orinstalling, any
part or component intended for use with, or as part of, any motor
vehicle or motor vehicle engine where a principal effect of the
part or component is to bypass, defeat, or render inoperative any
device or element of design installed on or in a motor vehicle or
motor vehtcle engine, and where the person knows or should know
that such part or component is being offered for sale or is being
installed for such use. The maximum civil penalty for a
violation of this section is $2,500.
EPA received many questions regarding the application of
this law to a situation where one engine is removed from a
vehicle aDd another engine is installed in its place. EPA’S
policy regarding “engine switching” is covered under the
provisions of Mobile Source Enforcement Memorandum No. lA
(Attachment 1). This policy states that EPA will not consider
any modification to a “certified configuration” to be a violation
of federal law if there is a reasonable basis for knowing that
emissions are not adversely affected. In many cases, proper
emission testing according to the Federal Test Procedure would be
necessary to make this determination.
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-2—
A “certified configuration” is an engine or engine-chassis
design which has been “certified” (approved) by EPA prior to the
production of vehicles with that design. Generally, the manufac-
turer submits an application for certification of the design of
each engine or vehicle it proposes to manufacture prior to
production. The application includes design requirements for all
emission related parts, engine calibrations, and other design
parameters for each different type of engine (in heavy—duty
vehicles), or engine-chassis combination (in light-duty
vehicles). EPA then “certifies” each acceptable design for use
in vehicles of the upcoming model year.
For light-duty vehicles, installation of a light-duty engine
into a different light-duty vehicle by any person would be
considered tampering unless the resulting vehicle is identical
(with regard to all emission related parts, engine design
parameters, and engine calibrations) to a certified configuration
of the same or newer model year as the vehicle chassis, or if
there is a reasonable basis for knowing that emissions are not
adversely affected as described in Memo 1A. The appropriate
source for technical information regarding the certified
configuration of a vehicle of a particular model year is the
vehicle manufacturer.
For heavy-duty vehicles, the resulting vehicle must contain
a heavy-duty engine which is identical to a certified configura-
tion of a heavy-duty engine of the same model year or never as
the year of the installed engine. Under no circumstances,
however, may a heavy-duty engine ever be installed in a light-
duty vehicle.
The most common engine replacement involves replacing a
gasoline engine in a light-duty vehicle with another gasoline
engine. Another type of engine switching which commonly occurs,
however, involves diesel powered vehicles where the diesel engine
is removed and replaced with a gasoline engine. Applying the
above policy, such a replacement is legal only if the resulting
engine-chassis configuration is equivalent to a certified
configuration of the same model year or newer as the chassis. If
the vehicle chassis in question has been certified with gasoline,
as well as diesel engines (as is common), such a conversion could
be done legally.
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—3—
Another situation recently brough’t to EPA’s attention
involves the offering for sale of used foreign—built engines.
These en9ines are often not covered by a certified configuration
for any vehicle sold in this country. In such a case, there-is
no way to install such an engine legally.
EPA has recently brought enforcement actions against certain
parties who have violated the tampering prohibition by performing
illegal engine switches.
It should be noted that while EPA’s policy allows engine
switches as long as the resulting vehicle matches exactly to y
certif led configuration of the same. or newer model year as the
chassis, there are some substantial practical limitations to
performing such a replacement. Vehicle chassis and engine
designs of one vehicle manufacturer are very distinct from those
of another, such that it is generally not possible to put an
engine into a chassis of a different manufacturer and have it
match up to a certified configuration. Therefore, practical
considerations will generally limit engine switches to
installation of another engine which was certified to be usedin
that same’ make and model (or a “twin” of that make and model,
e.g., Pontiac Grand Am and Oldsmobile Calais). In addition,
converting a vehicle into a different certified configuration is
likely to be very difficult, and the cost may prove prohibitive.
B. State Laws
Many states also have statutes or regulations prohibiting
tampering in general. Most of these laws specifically prohibit
tampering by individuals. A few specifically prohibit engine
switching, using provisions similar to those stated in EPA’S
policy. To determine the state law in any given state, the
state’s Attorney General’s office should be contacted.
In addition, many states have state or local antitampering
inspection programs which require a periodic inspection of
vehicles in that area, to determine the integrity of emission
control systems. Many programs have established policies for
vehicles which have been engine switched. While EPA does not
require these programs to fail engine switched vehicles which are
not in compliance with federal policy, the Agency does strongly
recommend that these programs set their requirements so as to be
consistent with the federal law. State or local programs which
pass illegally engine switched vehicles may mislead federally
regulated parties into believing that engine switching is allowed
by federal law.
Attachment
4/91
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Section J Document 13
Fact Sheet: Conversion of Vehicles and Engines to
Operate on Natural Gas or Propane
11/01/91
13
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1 iCI” PIC,CJ2cmQcv’
4,
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
_____ WASHINGTON, D.C. 20460

NOV — ggj
OFFICE QF
AIR AND RADIATION
Fact Sheet: Conversion of Vehicles and Engines to Operate on
Natural Gas or Propane
This Fact Sheet has been prepared to respond to requests for
information about converting motor vehicles to run on natural gas
or propane. We do not have any literature that we can send you
on how to make such conversions. You may wish to contact the
Department of Energy or the American Gas Association which are
more involved in that type of activity.
The Environmental Protection Agency (EPA) is primarily
concerned with the effects on emissions created by the conversion
of gasoline or diesel fueled vehicles or engines, or by vehicles
designed to operate on alternative fuels. The EPA is planning to
publish proposed standards for gaseous-fueled vehicles in the
near future. At this time, however, there are only federal
emissions standards for light-duty vehicles and heavy-duty
engines originally manufactured to operate on gasoline, methanol
or diesel fuels. You may wish to contact the Department of
Transportation concerning any applicable safety requirements.
Since there are no emission standards that currently apply,
light-duty vehicles and heavy-duty engines which are originally
manufactured to operate on gaseous fuels such as natural gas or
propane can be produced and sold without having to “certify” them
with EPA. The tampering prohibition of the Clean Air Act r 1OUld
not apply to such vehicles.
However, you should be aware that the federal tampering
prohibition does apply to the modification or conversion of
vehicles or engines originally manufactured to operate on
gasoline, methanol or diesel fuel.
The federal tampering prohibition is contained in section
203(a) (3) of the Clean Air Act (Act -}, 42 U.S.C. 7522(a) (3).
Section 203(a) (3) (A) of the ‘Act prohibits any pe s’on from remov-
ing or rendering inoperative any emission control device-or
element of design installed on or in a motor vehic1e’ ormotor
vehicle engine prior to its sale and delivery to an’ult’imate
purchaser and prohibits any person from knowingly removing or
rendering inoperative any such device or element of design after
such sale and delivery, and the causing thereof. The maximum
civil penalty for a violation of this section by a manufacturer
or dealer is $25,000; for any other person, $2,500.
Pnnzed an R.cyded Paper
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—2—
Section 203(a) (3) (B) of the Act prohibits any person from
manufacturing or selling, or offering to sell, or installing, any
part or component intended for use with, or as part of, any motor
vehicle or motor vehicle engine where a principal effect of the
part or component is to bypass, defeat, or render inoperative-any
device or element of design installed on or in a motor vehicle or
motor vehicle engine, and where the person knows or should know
that such part or component is being offered for sale or is being
installed for such use. The maximum civil penalty for a
violation of this section is $2,500.
The EPA has established a policy whjch is intended to reduce
the uncertainty that a person faces regarding potential liability
under section 203(a) (3) of the Act if they use or sell
afterinarket parts or systems, or make adjustments or alterations
to parts or system parameters. These guidelines may be used to
provide assurance that certain acts do not constitute tampering.
This policy is outlined in Mobile Source Enforcement Memorandum
No. 1A (copy enclosed). Basically this policy states that we
will not consider any modification to a certified emissions
control configuration to be a violation of the tampering
prohibition if there is a reasonable basis for knowing that
emissions are not adversely affected. In many cases, emission
testing according to the Federal Test Procedure would be
necessary to make this determination. Proper conversions to
alternative fuels invariably require that the emission control
devices such as catalytic converters, remain on the vehicles;
therefore, removal of these devices (even on dedicated
conversions) is considered tampering.
- The specific language of Memorandum No. lA addresses only
dealers and vehicle and engine manufacturers. In 1977 and again
in 1990, section 203(a) (3) was amended and the tampering
prohibition extended to include any person as well as commercial
repair facilities and fleet operators. The policy enunciated in
Memorandum No. 1A has been extended to all the partiesnamed in
section 203(a) (3) along with automobile part manufacturers and
suppliers.
The installation of a natural gas or propane system and any
accompanying alterations, or adjustments of vehicles or engines
originally, manufactured to operate on gasoline, methanol or
dieselfuel-or alterations or adjustments of motor vehicle engine
parts .d .àperating parameters of those vehicles or engines, such
as carburetor adjustments, would fall within categories 1(b) and
1(c) of ithe memorandum.
Under paragraph 3(c) of the memorandum, however, EPA is
willing to review determinations by state or local environmental
control agencies which have expressly represented that a
reasonable basis exists to believe that emissions performance
would not be adversely affected by a certain natural gas or
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—3—
propane conversion and if reasonably supported, to extend such a
determination to all States. To our knowledge, only California
and Colorado have programs for evaluating the effect of natural
gas and propane conversions on motor vehicle emissions
performance.
Except with regard to conversions of vehicles to be operated
in high altitude areas, we accept determinations by the State of
California Air Resources Board of a reasonable basis and have
extended those previous and future natural gas system and propane
conversion determinations to all States.
You should be aware that in addition to the federal
tampering prohibition, many states have tampering prohibitions
which may also be interpreted as prohibiting natural gas or
propane conversions. For further information on applicable state
laws you may wish to contact the offices of the state attorney’s
general in each state in which conversions are anticipated.
The following are the addresses for the organizations we
have mentioned:
American Gas Association Department of Energy
1515 Wilson Blvd. 1000 Independence Avenue, S.W.
Arlington, VA 22209 Washington, D.C. 20585
Department of Transportation California Air Resources Board
400 7th Street, S.W. 9528 Telstar Avenue
Washington, D.C. 20590 El Nonte, CA 91731-2900
(818) 575—6848
Colorado Department of Health
4210 East 11th Avenue
Denver, Co 80220—3716
(303) 331—8562
I hope this information is useful to you. If you have any
further questions concerning this matter, please feel free to
contact us at (202) 260-9040.
Enclosure
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Sect ion J Document 14
1992 Volatility Question and Answer Document
xxIxxI92
14
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1992 VOLATILITY QUESTION AND ANSWER
DOCUMENT
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PREFACE
This 1992 edition of the Enforcement of Volatility Regulations — Ouestions and
Answers responds to questions we received concerning the manner in which the United
States Environmental Protection Agency intends to implement and enforce the gasoline
volatility regulations at 40 CFR §* 80.27 - 28. It was prepared by the Field Operations
and Support Division of the Office of Mobile Sources, United States Environmental
Protection Agency, and supersedes the 1990 edition of this document Answers that
have been revised from the 1990 edition are indicated by an asterisk (*). New questions
and answers are indicated by a double asterisk (u). Questions and answers that no
longer apply due to statutory or regulatory changes have been deleted.
Several persons submitted questions regarding reformulated gasoline. As this
document pertains only to the enforcement of the volatility regulations, these questions
have not been included.
Regulated parties may use this document to aid in achieving compliance with the
volatility regulations. However, it does not, in any way, alter the requirements of the
volatility regulations.
We will attempt to respond in writing to any additional questions on this subject.
Please send any such questions in writing to Director, Field Operations and Support
Division (6406J), United States Environmental Protection Agency, 401 M Street, S.W.,
Washington, D.Q 20460.
Maiy jmith
1 frec r
Field Operations’thid’Support Division
Washington, D.C.
May 1, 1992
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TABLE OF CONTENTS
A. LEADTIHEISSUES. .
B. ESTABLISHING THE CLASSIFICATION OF PRODUCT AND
APPLICABLE RVP STANDARD 3
C. CLASSIFICATION OF REGULATED PARTIES 9
D. LIABILITY OF REGULATED PARTIES 11
E. DEFENSES . . . . . . . . 15
F. TEST METHODS . 29
C. SANPLINGMETHODS 39
H. INSPECTIONS 43
I. NOTIFICATION OF VIOLATIONS . 4_S
3. REMEDIAL ACTION 47
K. STATEVOLATILITYPROCRAMS 49
ATTACHMENT . 53
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A. LEAD TIME ISSUES
*1. Question: Can a refiner ship or a pipeline transport higher RVP fuel in the
summer to be used in the winter?
Answer The regulations prohibit the sale, supply, offering for sale or supply,
dispensing or transport of gasoline whose volatility exceeds the applicable standard.
“Applicable standard” is defined in the regulations as the standard for the geographical
area and time period in which the gasoline is intended to be dispensed to motor
vehicles.
The issue of what is the applicable standard will only arise when gasoline is
moving through the distribution system. Once gasoline is delivered to a service station
or fleet dispensing facility, the applicable standard will be the RYP standard for the area
in which the facility that is selling, offering for sale, or dispensing gasoline during the
control period is located. For gasoline in other parts of the distribution network, the
Agency anticipates that refiners, importers, distributors, ethanol blenders, resellers, and
carriers will clearly designate the volatility class of gasoline and the location in which it
is intended to be dispensed to vehicles during the control period. Where this is not
done and this information cannot be determined, the Agency will assume that the lowest
standard is applicable.
Therefore, gasoline that is not intended to be dispensed to motor vehicles until
after the close of the volatility control period on September 15 may be lawfully shipped
prior to that date. However, the burden will be on the parties involved in the sale and
distribution of such product to demonstrate that it will in fact be dispensed at a later
date and to assure that it is not dispensed during the control period. Particularly at a
facility directly supplying retail and fleet facilities (e.g., a terminal or bulk plant),
product intended for later use would have to be kept carefully segregated from low
volatility product being shipped to such facilities, until after September 15. Should such
high RVP fuel actually end up at a retail station or fleet facility prior to the close of the
control period, this will constitute a violation of the regulations for which responsible
parties will be liable. The Agency encourages additional oversight testing when “winter”
gasoline is in the system.
In order to determine if particular product is intended for dispensing after the
control period, the Agency will generally rely on certifications or disclaimers contained
in documents accompanying the product which clearly state the intended use of the
product, as well as any other evidence showing the status or intended use of the product.
2. Question: What should a retailer do if, due to low turnover, he still has
noncomplying gasoline in his tanks when he receives complying gasoline from the
distributor at the beginning of the compliance period? If he has a large tankful, does he
have to hold it all summer? May a terminal close and seal off tankage that does not
meet specifications?
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Answer The regulations provide a two-date s stem for the start of the volatility
control period. Retail stations should begin receiving lower RVP fuel from their
distributors even before the effective date of the distributor’s compliance period (as the
distributor brings his facility into compliance) and by such date, at the latest, the retailer
should begin receiving product that fully meets the applicable RVP standard. Thus,
retail stations should receive at least a month’s deliveries of complying fuel plus an
additional quantity of fuel with a lower volatility than was in its tanks initially. Should a
violation occur and a party is able to demonstrate a particular hardship, EPA will take
this into account in determining whether (and in what amount) to mitigate the penalty.
In the case of a terminal that has product exceeding the applicable RVP
standard, the regulations require that this product not be sold, supplied, offered for sale
or supply, dispensed, or transported. The alternatives available are: a) store and seal
the product until a time period when the product can be distributed, provided it is
clearly designated as product not intended to be sold, supplied, offered for sale or
supply, dispensed, or transported; b) transport the product to a geographic area where
the product can be used, provided that such transportation is only for the purpose of
correcting the high RVP; c) blend lower volatility product with the higher RVP product
to bring its volatility within the standard.
**3 Question: Can an upstream facility located in an ozone nonattainment area that
supplies gasoline to nonattainment areas store and dispense 9.0 psi RYP gasoline during
the month of May, without violating the volatility regulations?
Answer: The chart contained in the June 11, 1990 (‘Phase II”) (55 FR 23658)
rulemaking sets the RVP standard for all facilities in all states at 9.0 psi for the month
of May. This is the standard for nonattainment as well as attainment areas. Therefore,
any facility may store or distribute gasoline whose RVP is 9.0 psi or below during the
month of May. However, upstream facilities located in ozone nonattainment (and
former nonattainment) areas that are supplying 7.8 psi areas and are within states
designated by the Phase H rulemaking to have a 7.8 psi standard in 1992, must have for
distribution gasoline that is in compliance with the 7.8 psi standard on June 1, 1992.
Moreover, upstream facilities supplying gasoline to 7.8 psi standard areas must take
steps to ensure that gasoline moving through the distribution chain prior to June 1, 1992,
is in compliance with the 7.8 psi standard if the gasoline is to be dispensed to motor
vehicles in a 7.8 psi standard area on or after June 1. If an upstream facility that
supplies 7.8 psi areas also supplies 9.0 psi standard areas, it may have for distribution
gasoline that is 9.0 psi, provided that it takes reasonable steps to ensure that the 9.0 psi
gasoline will be shipped to the proper area. . Section B, question 6, for Further
discussion of this situation.
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B. ESTABLISHING THE CLASSIFICATION OF PRODUCT AND
APPLICABLE RVP STANDARD
1. Question: What changes in gasoline RVP requirements have been made or are
anticipated as a result of section 211(h) of the Clean Air Act Amendments of 1990?
Answer. Section 211(h)(1) of the Clean Air Act Amendments of 1990 (Act)
provides that EPA shall promulgate regulations making it unlawful for any person during
the high ozone season to sell, offer for sale, dispense, supply, offer for supply transport,
or introduce into commerce gasoline with an RVP in excess of 9.0 psi. Section
211(h)(2) of the Act provides that EPA may not impose an RVP standard lower than
9.0 psi in any area that has been designated as an ozone attainment area, with the
exception of former ozone nonattainment areas that have been redesignated as
attainment areas.
In the Phase U volatility rulemaking published on June 11, 1990, EPA had
designated statewide RVP standards to be implemented in 1992 and beyond. Although
no state standard was set above 9.0 psi, several states, primarily in the South and
Southwest, were .designated to have a statewide standard of 7.8 psi. Because the Act
now prohibits a standard below 9.0 psi for ozone attainment areas, EPA amended the
volatility regulations in a rulemaking published on December 12, 1991 (56 FR 64704), to
provide that the 7.8 psi standard shall apply only to ozone nonattainment areas located
in those states designated as 7.8 psi states in the Phase II rulemaking. Note, however,
that nonattainment areas located in states designated as 9.0 psi states in the Phase II
rulemaking will have a 9.0 psi standard.
* *2. Question: Will EPA be publishing maps or other detailed listings that will
specifically identify the areas in which 7.8 psi RVP gasoline is required?
Answec A list of the areas requiring 7.8 psi gasoline and those requiring 9.0 psi
gasoline has been prepared by EPA. A copy of this list is attached.
3. Question: The California Air Resources Board RVP rules allow a refinery to
designate a tank as “finished and ready for shipment” after the tank is certified by
laboratory tests. Only then is it considered finished gasoline and subject to RVP
regulations. Will EPA grant the same flexibility?
Answer. If, at a refinery or import facility, a tank blend is above the applicable
RVP limit and the refinery/import facility intends to re-blend it until it meets the
regulatory standard before introducing it into the distribution system, the product should
be clearly designated as product not intended for shipment, and documentation should
support this classification. The product then would not be considered finished gasoline
that is subject to the regulations.
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4. Question: How will an upstream facility establish at the time of inspection that a
product is intended to be blendstock rather than finished product?
Answer; With regard to product being shipped out of the refinery, in the absence
of evidence to the contrary, if a product’s characteristics are such that the product meets
the regulatory definition of gasoline (“any fuel sold in any State for use in motor vehicles
and motor vehicle engines, and commonly or commercially known or sold as gasoline’)
EPA will treat it as finished gasoline subject to the volatility regulations. However, as a
matter of enforcement policy, EPA will not hold a party liable for product that arguably
meets the regulatory definition of gasoline if: a) the product is clearly labeled as
blendstock and documentation supports this classification; b) the label clearly states that
the product may not comply with federal RVP standards; c) some aspect of the product’s
quality other than RVP supports the party’s claim that it intended the product to be
further blended before being sold, supplied, etc., as finished product (e.g., the octane is
higher or lower than product typically sold as regular or premium grade gasoline); d) the
party has obtained a written certification from the buyer/recipient of the product that he
understands that the product may be nonconforming and that he will not sell or supply
the product as finished gasoline unless or until it is blended to meet federal RVP
standards, or he receives the equivalent certification from a subsequent buyer; and e)
the party has no knowledge or reason to believe that the product will not be further
blended to comply with the applicable RVP standard before being sold, supplied, or
transported as finished product.
5. Question: How will an upstream facility establish at the time of inspection that a
product is intended for storage or export rather than for sale?
Answer. EPA will assume that all gasoline found in the United States is intended
for domestic sale and thus is subject to the RVP standards unless the product is clearly
documented to be for export only and the evidence (e.g., normal commercial documents)
pports this classification. The label should further clearly state that the product may
not comply with federal RVP standards. Similarly, regarding product in storage at a
refinery or importer facility, EPA will not hold a party liable for product that does not
comply with the applicable standard if the evidence shows that the product is being
stored and is not being sold, offered for sale, supplied, offered for supply, transported or
dispensed. The Agency will generally rely on certifications or disclaimers contained in
documents accompanying the product which clearly state the intended use of the
product, as well as any other evidence showing the status or intended use of the product.
*6. Question: How can a party establish the place the gasoline is to be sold for
purposes of determining the applicable RYP standard? If a terminal located in an
ozone nonatt inment area requiring 7.8 psi gasoline maintains inventories of both 7.8 psi
gasoline and 9.0 psi gasoline (for distribution to locations outside the nonattainment
area), what documentation pertaining to gasoline volatility is the terminal operator
required to maintain? What documentation is required by a pipeline terminal located in
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a nonattainment area which sells only 9.0 psi gasoline designated for attainment areas?
Are there any requirements on terminal signs, bills of lading, or other documents that
will be required to assure customers and EPA that the correct RVP gasoline is being
distributed to the proper locations? Would letters to distributors nQtifying them of the
possibility of two RVP grades of gasoline being available at the terminal suffice? Must
the loading arms at the truckloading rack be marked to indicate RVP? How can
parties protect themselves? Where no indication exists regarding intended destination,
how will EPA determine the applicable RVP standard?
Answer EPA does not require parties to maintain specific documentation
pertaining to gasoline volatility. ,However, if’ EPA tests gasoline at a facility located in
or near a 7.8 psi area to be between 7.8 and 9.0 psi, it will ask the facility to look at.
commercial documents, such as shipping documents and contracts of sale, for evidence
of the destination at which the gasoline is intended to be dispensed to motor vehicles
and/or where the gasoline is being shipped. If the party, in the normal course of his
business, does not have the addresses of the retail facilities that ultimately will be
dispensing the gasoline to motor vehicles, it should take reasonable steps to ensure that
the gasoline will be shipped to the proper area. For example, commercial documents,
such as invoices, bills of lading, etc., should clearly indicate that the gasoline contains 9.0
psi gasoline, not intended for sale in 7.8 psi designated areas. In some cases, labeling
the gasoline at the rack may be appropriate. EPA inspectors will ask to review the
refiner or terminal operator’s documents and any other methods the party employs to
ensure delivery to the proper area. In addition, EPA inspectors may ask for a list of the
terminal’s distributors that will be delivering gasoline to 7.8 psi areas for possible follow-
up inspections. In the absence of any indication concerning intended destination,EPA
will assume that a terminal located in or near a 7.8 psi area will be supplying outlets in
7.8 psi areas and will apply that standard.
If a violation is found downstream and a refiner or terminal is presumed liable
for the violation, as part of its defense, the party may provide (along with evidence of
any other methods the party employs to ensure delivery to the proper area)
documentation showing that the gasoline was shipped to the proper area and that the
shipping documents accompanying the gasoline clearly indicated that the gasoline was
9.0 psi and not intended for sale in areas having a 7.8 psi standard. If, during a follow-
up inspection of a distributor facility, EPA determines that the distributor delivered 9.0
psi gasoline to a 7.8 psi area, the distributor may be deemed liable for the violation.
**7 Question: Given that a refinery does not offer gasoline for sale at its location and
ships on a pipeline to a proprietary terminal some distance away, will the refinery be
required to meet the RVP standard in its tanks or can the proprietary terminal act as a
remote blending location and final point of sale for EPA RVP monitoring purposes.
Answer. A refiner must meet the applicable RVP standard in its tanks if the
gasoline is sold as finished gasoline. As indicated above, however, a refiner may sell
gasoline as blendstock intended to be further blended before sale as finished product.
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In such case, the refiner must fulfill the criteria outlined in the answer to question 4
above. /
*8. Question: What type of labeling of products will be required? Must a party
physically label tankage, or will it be sufficient that records clearly indicate the RVP
level and whether the gasoline is intended for export, storage or to be used as
blendstock?
Answer: The regulations do not require that labels be physically affixed to tanks
of gasoline. Commercial documents indicating the RVP level and whether the gasoline
is intended for export, storage or to be used as blendstock should be sufficient.
However, a party may wish to label its tanks to further protect itself.
9. Question: If product type at a retail facility is in the process of being changed to an
alcohol blend, the product coming from the pump nozzle may not initially satisfy the
alcohol content requirement at 40 CFR § 80.27(d)(2). Will the retail facility still be
eligible for the special provision for alcohol blends at 40 CFR § 80.27(d)(1) of the
regulations?
Answer: In order to be eligible for the special provision at 40 CFR § 80.27(d)(1),
which provides for an additional one pound per square inch allowance, the product
coming from the pump nozzle must satisfy the alcohol content requirement. This would
apply when product type is being changed at a retail outlet.
*10. Question: Must the label required at 40 CFR § 8027(d)(3)(i) state the precise
percentage concentration of ethanol?
Answer: The pump labeling requirement for ethanol blends has been deleted
from the volatility regulations by the final rulemaking published on December 12, 1991.
*11. Question: Will Phase H of the volatility regulations, to be implemented in 1992,
continue to permit a one pound RVP allowance for ethanol blends?
Answer. Yes. However, in accordance with the Clean Air Act Amendments of
1990, the final rule published on December 12, 1991, provides that, to qualify for the
one psi allowance, gasoline must contain denatured, anhydrous ethanol. The
concentration of ethanol, excluding the required denaturing agent, must be at least 9%
and no more than 10% (by volume) of the gasoline. 40 C.F.R. § 80.27(d)(2).
**12. Question: Are gasoline volatility rules regarding the RVP of gasoline ethanol
blends similar in ozone attainment and nonattainment areas?
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Answer The volatility rule providing for a one psi allowance for ethanol blends
applies to qualifying gasoline in both ozone attainment and nonattain.ment areas.
93. Question: Some vehicle and engine manufacturers blend test fuels for the purpose
of testing vehicles on a wide range of fuel volatility. If the volatility of the blended fuel
exceed the standard, what provisions will EPA extend for such testing? Would the
Agency relax these reporting requirements for the production, storage, shipping and use
of test fuels with high RVPs in amounts less than ten thousand gallons?
Answer: The Notice of Proposed Rulemaking published on October 18, 1991,
proposed an exemption from the RVP standards for fuels used for testing purposes.
Although the rule has not been f1n i1ized, as a matter of enforcement policy, EPA will
exercise its discretion to not enforce violations of the volatility standards in the case of
high RVP gasoline blended for the purpose of conducting tests on vehicles, provided the
party provides written notification to EPA in advance, which includes information
concerning the nature and purpose of the tests and the fuel (e.g., supplier, RVP level,
amount), and provided that EPA determines that the test program has a valid purpose
and will have no significant adverse impact on the environment, If the gasoline is to be
used in an ozone nonattainment area, the party should justify why the test cannot be
performed in an ozone attainment area.
The Agency does not plan to further relax its enforcement discretion nor the
above notification requirements for test fuels produced in small volumes.
14. Question: Are territories and possessions like Puerto Rico covered under the
regulations? -
Answer: Only gasoline intended to be dispensed in the 48 states in the continental
U.S. is subject to the regulations. Product shipped to such states from places like Puerto
Rico (or Alaska or Hawaii) will be treated like imported gasoline.
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C. CLASSIFICATION OF REGULATED PARTIES
1. Question: What is the classification of a party who receives and stores, but does not
own the gasoline? What if he blends the gasoline at the owner’s discretion?
Answer Under the regulations, “distributor” means any person who transports or
stores or causes the transportation or storage of gasoline at any point between any
gasoline refinery or importer’s facility and any retail outlet or wholesale purchaser-
consumer’s facility. Thus, ownership is not necessaiy to render a party a distributor
under the regulations. A distributor who transports or stores or causes the
transportation or storage of gasoline without taking title to or otherwise having any
ownership of the gasoline and without altering either the quality or quantity of the
gasoline is a “carrier” under the regulations. Any person who blends gasoline, however,
is classified as a refiner and is subject to refiner liability and defenses. A person who
adds ethanol to gasoline (and meets the other elements of the definition) is classified as
an ethanol blender and is subject to ethanol blender liability and defenses.
2. Question: Will a trader who buys and sells gasoline only in “back-to-back”
transactions, thereby taking legal title but not more than instantaneous physical custody -
of such products, be considered a “distributor” under 40 CFR § 80.2?
Answer Yes, the regulations provide for distributor liability on the part of any
person who transports or stores or causes the transportation or storage of gasoline at
“any point” between any gasoline refinery or importer’s facility and any retail outlet or
wholesale purchaser-consumer’s facility. A party who takes legal title to the product
transports or stores or causes the transportation or storage of the gasoline during the
time it is in that party’s custody and, thus, is covered as a distributor under the
regulations.
3. Question: Will a blender of gasoline be considered a “refiner” under 40 CFR § 80.2?
Answer. Yes. However, if the party meets the definition of an ethanol blender,
he will be subject to ethanol blender liability and defenses rather than refiner liability
and defenses.
4. Question: Assume that an ethanol blender uses raffinate as a fuel component. In
the event of an RVP violation detected downstream, must the blender meet the defense
requirements of a refiner or of an ethanol blender as described in 40 CFR § 80.2 (g)?
Answer. The Agency interprets the definition of “ethanol blender” strictly as any
person operating a refinery at which gasoline is produced solely through the addition of
ethanol to gasoline, and at which the quality or quantity of gasoline is not altered in any
other mpnner. A blender that uses raffinate as a fuel component thus could not be
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classified as an “ethanol blender,” but rather would be, classified as a “refiner” and would
be required to meet the defense requirements of a refiner in the event a violation is
detected downstream.
5. Question: Often, fuel terminals offering ethanol and gasoline for blending are
automated or otherwise unsupervised, allowing a truck driver to create a load of blended
fuel without direct supervision from the component supplier. The fuel is either blended
in line while feeding the truck or actually splash blended in the truck. Accordingly, in
the latter circumstance, are there two ethanol blenders, one the terminal operator
responsible for testing the RVP of the component gasoline, and the second being the
truck operator creating the newly blended fuel and responsible for testing the RVP
thereof?
Answec This hypothetical describes three potentially responsible parties. Where
ethanol and gasoline are “splash” blended in a truck operated by a common carrier,
usually there are two “ethanol blenders” subject to the volatility regulations: the common
carrier company and the company that hired the common carrier. The regulations
define an “ethanol blender” as any person who owns, leases, operates, controls, or -
supervises an ethanol blending plant. In the situation described, EPA would consider
the truck as the ethanol blending plant. The company that owned and/or operated the
truck would thus meet the definition of “ethanol blender,” and in the event of a violation
would be responsible for meeting the defense for an “ethanol blender” found at 40 CFR
§ 80.28(g)(6) of the regulations.
The company that hired the truck in most situations would meet the definitions
both of “ethanol blender” and “distributor,” 40 CFR § 802(1), for “caus [ ing] the
transportation or storage of gasoline at any point between any gasoline refineiy or
importer’s facility and any retail outlet or wholesale purchaser-consumer’s facility,” and
in the event of a v o1ation would be required to meet the defenses at 40 CFR §
80.28(g)(3) and (g)(6).
Uider the regulations, where a violation is detected at an ethanol blending plant,
the d tributor, carrier, and refiner or importer of the gasoline which was blended with
ethanol are deemed to be in violation, in addition to the ethanol blender. 40 CFR §
80.28(d)(1). The company that operated the terminal and provided the component
gasoline would meet the definition of a gasoline distributor and in the event of a
violation would be liable unless it is able to establish the defense for distributors found
at 40 CFR * 80.28(g)(3).
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D. LIABILITY OF REGIJL&TED PARTIES
L Question: Where one refiner supplies gasoline to its branded retail outlet which was
obtained in exchange from a terminal operated by another refiner, and a violation is
detected at the retail outlet, who is liable?
Answer: The regulations provide for presumptive liability on the part of both
parties to the exchange, one party as the “branded” refiner and the other as a distributor.
2. Question: For violations found at branded or unbranded distributor facilities, will
EPA seek to hold liable only the distributor in custody of the product at the time of the
violation or will all distributors in the prior chain of title be considered vicariously
liable?
Answer: All distributors will be presumed liable.
3. Question: For violations found at branded or unbranded retail outlets or wholesale-
purchaser consumer facilities, will EPA hold liable all distributors in the prior chain of.
title to that product?
Answer: Yes.
4. Question: As to mere storage of gasoline at refineries or import terminals, does
EPA’s enforcement policy exemption apply to only the actual importer or refiner of such
product, or to any person who owns or took title to such product while it remained in
storage at the import or refinery terminal? -
Answer: The policy regarding gasoline in storage will apply to any person who•
owns or takes title to the gasoline so long as’ the person can show that the product is in
fact being stor d and is not being sold, offered for sale, supplied, offered for supply,
transported or dispensed. if the product is moved out of storage and put into the chain
of distribution, the owner of the product is subject to liability for nonconforming
gasoline as set forth in the regulations.
5. Question: If a refiner ships product to its own terminai via a fungible pipeline and
can show that only product with correct volatility was put into the pipeline by the
refiner, but that product having high volatility is discovered at the terminal, is the refiner
liable? If the refiner removes the high volatility product from distribution, how can the
refiner show that it has done so? -
Answer. In order to establish a defense in this situation, the refiner would have to
satisfy the elements of the refiner’s defense at 40 CFR § 80.28(g)(4).
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The refiner can establish it has removed the high volatility product from
distribution by placing disclaimers or certifications on the paperwork relating to this
product which clearly state the product is not in distribution or that it is to be -
distributed to an area where it will be in compliance. If the product is further
distributed as non-complying fuel, this will constitute a violation.
6. Question: In a situation where a violation is detected at a branded retail outlet
which is supplied from a branded distributor which, in turn, receives gasoline through a
pipeline which transports the commingled production of the refiner whose brand
appears, plus one or more other refiners, are all the refiners liable? How could the
refiners establish a defense?
Answer The refiner whose brand name appears at the retail outlet would be
liable; in order to establish a defense, it would have to show each of the elements of the
refiner’s branded facility defense in 40 CFR § 80.28(g)(4). The other refiner(s) whose
commingled product was delivered to the retail outlet may be liable if they meet the
definition of another regulated party (e.g., distributor). -
7. Question: If a violation is found at a terminal, where the terminal operator does not
own the gasoline, who would be liable?
Answec The owner or operator of a terminal which stores gasoline without
taking title to or otherwise owning the gasoline and without altering either the quality or
the quantity of the gasoline, is defined by the regulations as a “carrier” (see 40 CFR §
802(t)). As a carrier, this party would be presumed liable because the gasoline having
high volatility was found at that carrier’s facility. In addition, the refiner, importer, or
ethanol blender who produced or imported the gasoline would be presumed liable.
8. Question: What should a carrier do if it would be in breach of a contract with the
company supplying the product by refusing to transport or store product having excessive
volatility?
Answer Where gasoline having excessive volatility is found at a carrier facility
(including a terminal which does not take title to the product), the carrier is presumed
liable for violating the regulations. We believe carriers can, and should, negotiate
contracts which are drafted in such a way that the carrier is not obligated to transport or
store product in violation of the regulations.
9. Question: In a case where more than one party is presumed liable for a violation,
and more than one of the parties is unable to establish a defense, is each party liable for
a separate penalty?
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Answer Each party wEo is liable for a violation, and who is unable to establish a
defense, is liable for a separate penalty.
p10. Questioiu If a finished product tank at a refinery is analyzed by the refiner using a
regulatory-approved method and is found to be 0.2 psi below the applicable RVP
standard and is released for sale, and a day later the tank is retested by the refiner and
found to be 0.1 psi over the applicable RVP standard, is the refinery out of compliance?
Answer As discussed in Section F, question 20, below, EPA applies an
enforcement tolerance of 0.3 psi to compensate for testing variances that occur with
RVP measurements when bringing an enforcement action for an RVP violation. If, as
in this scenario, the average of the refiner’s test results is at or below the standard, EPA
is not likely to test the product above the standard plus the enforcement tolerance and
bring an enforcement action. If, however, EPA tests the gasoline to be more than 0.3
psi above the standard, it may bring an enforcement action. Therefore, this case, it
would seem prudent to conduct additional testing on this product.
11. Question: Which party in the distribution system is liable (must make a defense)
if a sale of 9.0 psi gasoline is made in. a nonattainment area? Is liability different for:
1) company-owned retail stations selling exchange gasoline, 2) branded jobber retail
stations selling exchange gasoline, 3) branded jobber retail stations selling spot gasoline.
Answer: If 9.0 psi gasoline is sold by a retail outlet in a nonattainrnent area
having a 7.8 psi standard, the parties in the distribution chain will be presumed liable, as
they would for any RVP violation, in accordance with the liability provisions of 40 CFR
* 80.28. liability attaches to any retail outlet selling gasoline that is out of compliance.
• 12. Question: For a terminal supplying both levels of RVP-controlled gasoline (with
the intent of satisfying attainment and nonattainment markets appropriately), what
liability, if any is incurred if a jobber knowingly buys 9.0 psi gasoline and supplies it to a
nonattainment area retail station?
Answer: If a jobber supplies 9.0 psi gasoline to a retail outlet in a 7.8 psi area,
the termin iI will be presumed liable for the violation. However, the termin 1 may rebut
the presumption of liability by meeting the elements of its defense, which, in this
scenario, would include a showing that it made reasonable efforts to ensure that-the
gasoline would not be sold in a 7.8 psi area, such as clearly marking the gasobne and
commercial documents as 9.0 psi gasoline not to be sold in 7.8 psi areas.
13. Question: To what extent will a gasoline supplier be liable for the blending of
gasohol (in meeting the ethanol concentration requirement) by a secondary bulk
terminal which sells to jobbers under (1) the original supplier’s brand (2) other brand?
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Answec In this scenario, the terminal would be the ethanol blender, If the
terminal sells the ethanol blend under the original refi.ner’s brand, the refiner would be
presumptively liable for violations found downstream. Where the terminal sells the
product under another name, under the current regulations, the refiner would not be
presumptively liable unless the violation is found at a retail outlet bearing the refiher’s
brand. The refiner, however, may be able to meet part of its defense by showing that
the violation was caused by the ethanol blender who failed to blend the gasoline with
the proper concentration of ethanol.
*s14. Question: Many petroleum distribution facilities (terminals) are automated.
Therefore, the owner/operator does not personally dispense product into a
transportation vehicle. Rather, the driver loads those products or mixtures (e.g., ethanol
blends) desired by the retail customer. On occasion, a driver not an employee/agent of
the owner/operator will arrive at the terminal with a non-complying material already in
the transportation vehicle. To this material, he/she will add complying product and
ethanol in a quantity sufficient to make the entire load 10% by volume. The amount of
ethanol added to the vehicle may actually be more than 10% by volume of what was
loaded from the terminal. Under this scenario, should the carrier and/or retailer be
found to have supplied a product that did not meet RVP compliance standards, it
appears that they, as well as the distribution facility (and perhaps others), would be held
presumptively liable. Do the regulations provide the terminal’s owner/operator with the
opportunity to remove themselves from the presumption of liability by the mere showing
that it did not participate in the blending? Must the owner/operator provide only as
much ethanol as may be necessary to meet the 10% ethanol. by volume requirement for
the product loaded at the terminal?
Answer if the truck driver dispenses ethanol and gasoline into the truck
compartment in amounts determined by the driver, the trucker would be liable as the
ethanol blender. Consequently, the terminal would not be required to meet the 10%
ethanol by volume requirements of the product loaded at the terminal, if the product is
premixed and sold as a 10% ethanol product, the terminal would be liable as the
ethanol blender, if a violation is found downstream from the trucker, and it is
determined that the trucker is the ethanol blender, the terminal may still be presumed
liable, particularly if the violation involves a higb RVP level, rather than an improper
amount of ethanol.
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E. DEFENSES
*1. Question: What kind of documentation or other evidence must a party provide to
establish that it (or his employees or agents) did not cause a violation?
Answer All factors cannot be listed because factual circumstances differ and
because EPA cannot anticipate all the types of evidence that may show non-causation.
For all parties, however, in meeting the non-causation portion of their defense, the
regulations provide that the party must show, by reasonably specific showings, by direct
or circumstantial evidence, that the party (or the party’s employee or agent) did not
cause the violation. In many instances the cause of the violation will be evident from
the inspection results and related documentation.
In the case of a refiner or importer, providing results of the sampling and testing
of the gasoline in question before it left the refinery or importer’s facility would be a
strong factor in determining whether the refiner or importer caused the violation.
However, because the refiner or importer could have caused the violation despite
acceptable test results, additional evidence may be required. For example, a refiner
could ship to its own downstream terminal two products with different volatilities
intended for different geographical areas. -If these products become commingled after.
leaving the refinery, the product intended for the lower volatility area or time period
could be in non-compliance. The refiner thus could have “caused” this violation even
though the product was in compliance when it left the refinery.
For distributors, resellers, ethanol blenders and carriers, the best evidence to
show they did not cause the violation is evidence of who caused the violation and how.
Other strong evidence would be test results showing the particular gasoline in question
met the standards when it was delivered from these parties to the next person in the
distribution chain. Evidence consisting of the other defense elements (e.g., receipt of
product which was in compliance, an oversight program with periodic test results, and
evidence of blending no more than 10% ethanol in the case of ethanol blenders) would
assist in showing the violation must have been caused by another, but this is not
necessarily conclusive. Where no cause can be established for a violation, and no
person in the distribution chain will accept responsibility, the showing necessary for each
person in the chain to establish it did not cause the violation will be more difficult.
it is not sufficient for a distributor to show that it did not handle the gasoline,
because there are ways to cause a violation without actually touching the gasoline (e.g.,
by misrouting 9.0 psi RVP gasoline to a 7.8 psi RVP area). Moreover, other elements
of the defense still must be met.
In the case of a retailer, the following types of evidence are examples of relevant
factors relating to whether the retailer caused a violation:
1) records evidencing whether or not all gasoline purchased by the retailer after
the compliance date for upstream parties complied with the applicable standard;
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2) any evidence regarding whether the retailer knew or had reason to believe that
the gasoline did not meet the standard;
3) any evidence regarding alteration of gasoline stored in -his tanks by the retailer;
4) turnover rate; and
5) any evidence that the retailer may have received gasoline from an unidentified
supplier(s).
*2. Question: What criteria will EPA use to evaluate oversight programs; is sampling
and testing required, and if so how much? What type of service station monitoring is
considered acceptable? Is there a minimum percentage of shipments which must be
tested? What constitutes an acceptable oversight program for a gasoline manufacturer
supplying (1) branded jobbers selling under that manufacturer’s brand, (2) another
independent or unbranded jobber? As part of its oversight program, must a branded
refiner perform periodic sampling and testing at their non-owned terminals which supply
the branded refiner’s dealers pursuant to an exchange agreement, where the non-owned
terminals cany out their own periodic sampling and testing program? Is a retail
sampling program required for an adequate defense against an incident of
noncompliance at a branded retail outlet? If so, what is an adequate retail sampling
program? Please detail oversight responsibilities for jobbers.
Answer For a distributor, reseller, ethanol blender, or carrier (when the
violation is found at the carrier facility) to establish a defense, these parties must show
(in addition to other elements) an oversight program such as periodic sampling and
testing to monitor the product being sold, supplied, or transported by that party. This
program would thus monitor the quality of product in the possession or ownership of the
party, and not of product which has passed downstream. The volatility regulations do
not require that an oversight program consist of sampling and testing, but EPA is not
aware of an effective oversight program which would not include some periodic sampling
and testing.
The frequency of periodic testing which would satisfy this requirement will
depend upon several factors, including the following: a) the results of previous
sampling; b) the volume of product in a particular batch (the larger the volume, the
greater the justification for sampling and testing that batch); c) the degree of confidence
in the quality of the product which was received; d) the opportunity for increased
volatility while the product is in the possession of the party (e.g., higher volatility
product present which could be commingled); and e) the opportunity to deliver product
to a geographic region requiring a lower volatility.
In the case of refiners, two types of sampling and testing are required (in addition
to other requirements) in order to establish a defense where a violation is found
downstream and they are presumed liable. The refiner is required to show through
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sampling and testing that the gasoline determined to be in violation was in compliance
with the applicable standard when transported from the refinery. This generally would
require that all product be tested. In addition, when the violation is found at a branded
facility downstream, the refiner also must show a quality assurance.program at its
downstream branded facilities, such program to include periodic sampling and testing.
The frequency of periodic sampling and testing which would satisfy this requirement will
depend upon factors such as the following: a) the volume of product being handled at a
particular facility; b) the opportunity for violations to occur (e.g., the presence of higher
volatility product which could cause a violation through commingling); c) the results of
previous sampling at that facility and at facilities upstream and downstream from the
facility found in violation; d) if there is reason to believe relevant facilities do not
comply with the contractually imposed requirements designed to prevent violations; and
e) the results of sampling and testing in the market area where the violation occurred.
A branded refiner may use other parties to conduct periodic sampling and testing
downstream. However, if the branded refiner is to meet the oversight portion of its
defense, it cannot simply rely on another party’s oversight; the refiner must have an
appropriate contract with the party and maintain oversight with regard to that party’s
program. If the other party’s sampling or testing is inadequate the branded refiner will
not be able to meet its defense. -
**3 Question: What specific criteria are required for a gasoline refiner to establish a
defense in case of a field violation? If RVP levels were to exceed EPA standard, what
enforcement consideration would EPA extend to refiners who acted in good faith and
can produce source records demonstrating that original testing information indicated
compliance?
Answer The elements requfred for a refiner to establish a defense to a violation
detected at a downstream facility are contained in 40 CFR § 80.28 (g)(2) (for violations
found at unbranded distributor, ethanol blender, or carrier facilities) and 40 CFR ‘*
80.28(g)(4) (for violations found at branded distributor, ethanol blender, retail, or
wholesale purchaser-consumer facilities). In any case where a refiner is presumed liable
for a violation found at a downstream facility, one element required of the refiner to
make its defense is test data indicating that the gasoline was in compliance when it was
delivered to the next party in the distribution system or when transported from the
refinery (depending on the type of downstream facility).
**4 Question: What documentation would be necessary (e:g., transfer and receipt
records, testing, and sales documents) to satisfy EPA that gasoline was, in fact, 7.8 psi
maximum when sold out of a terminal which carries both 7.8 and 9.0 RVP gasolines.
Are tests at transfer to terminal storage adequate or would EPA demand testing daily or
at each loading rack?
Answer The regulations do not require a terminal to test the gasoline daily or at
each loading rack; rather, the regulations require an oversight program, which normally
will include periodic sampling and testing. However, the more evidence the terminal
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can provide showing that the gasoline met the standard when it left the terminal
(shipping and sales documents, test results of the gasoline in question, etc.), the easier it
will be for the termin2l to establish the non-causation part of its defense.
5. Question: What constitutes an acceptable RVP oversight program where ethanol is
blended into trucks? Since the fuel in the truck may be stratified immediately after
“blending” can the truck blender satisfy the oversight portion of its defense by hand-
blending samples of base products with ethanol, duplicating the truck ratios of gasoline
to ethanol?
Answec The basic requirements for ethanol blender oversight programs for RVP
are referred to in the answer to question E-2. In the case of truck blenders, sampling
and testing from locations in addition to the trucks may be useful or necessaiy. For
example, samples could be taken after the product is dropped, if it is dropped into a
relatively empty storage tank, or samples could be taken directly from truck
compartments. However, because of the possibility that product carried in the different
truck compartments is not homogeneous (this is particularly true in the case of truck
splash blending), the oversight program needs to include periodic sampling and testing
of product carried in each of the truck’s compartments separately, and not only of the
truck as a whole.
Hand-blending a small amount of gasoline product with ethanol and then testing
may be one facet of such an oversight program but we doubt whether it would be
reliable enough to substitute for taking representative samples of finished blended
product from storage tanks.
6. Question: What constitutes an acceptable oversight program for pipeline and motor
carriers; is testing required?
Answer Both pipeline carriers and motor carriers are presumptively liable for
violations detected at their facilities. To rebut this presumption, both types of carriers
have to demonstrate (in addition to the other defense elements) an oversight program
concerning the product which is carried. Such an oversight program does not necessitate
testing each load or batch of gasoline but envisions a program such as periodic sampling
and testing. The frequency of testing would depend on factors such as the size of the
loads or batches, and larger loads or batches would justify more frequent testing. The
oversight requirement applies to commingled product, as well as product received from a
single source.
In particular, motor carriers could have a valid oversight program without actually
testing the product themselves. For example, they could arrange with the owner of the
product to do periodic testing of the gasoline immediately before or after delivery and
could use these test results as a basis for oversight. Such an alternative oversight
program may be particularly appropriate for a carrier who delivers product that does not
pass through a facility owned or operated by him.
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Pipeline carriers, on the other hand, normally transport batches of gasoline
through their own facilities which are very large, so that testing of every batch by the
pipeline operator may be necessary. Factors relative to the appropriate frequency of
sampling for a pipeline include the following: a) the results of previous sampling (the
discovery of gasoline having excessive volatility would necessitate increased sampling
frequency); b) the volume of product being moved (the larger the volume of a batch, the
greater the justification for sampling and testing that batch); c) the degree of co fidence
the pipeline has in the representations made by the company providing gasoline to the
pipeline; and d) the opportunity for increased volatility due to commingling with higher
volatility product in the pipeline.
7. Question: Where a pipeline company makes direct shipments to termin2ls (with
no intermediate tankage or commingling of products), is redundant testing of shipments
by the pipeline required for adequate defense, given that multiple testing of all
shipments has been performed by the refinery?
Answer As indicated above, the regulations do not require carriers, including -
pipelines, to test each shipment of gasoline to make a defense; rather carriers are
required to have an oversight program, which normally will include periodic sampling
and testing. However, in the case of a pipeline, testing each batch of gasoline may be
necessary to ensure that the gasoline meets the applicable standard. The amount of
testing may be influenced by the amount of confidence the pipeline has in the company
supplying the gasoline.
& Question: Did EPA anticipate that some pipelines would require RVP to be 03 psi
below the standard? Why can a common carrier set a lower standard than EPA?
Answer EPA anticipated that regulated parties would take action to assure
product they sell, dispense or transport complies with the volatility standard. EPA has
not anticipated the particular levels which would be used. Pipelines and other
businesses are free to establish whatever criteria they choose as part of the operation of
their business as long as the criteria established does not require noncompliance with
the federal standard. EPA assumes that such lower standards have been set in order to
assure that product sampled by EPA is not found to be in violation, and are thus a
prudent effort by the pipelines to comply with the standards in light of EPA’s statements
that regulated parties must take test variability into account in producing and marketing
their product.
9. Question: What must a refiner do to meet the “contract defense,” as set forth in 40
CFR § 80.28(g)(4)?
Answer The defenses set forth in 40 CFR § 80.28(g)(4) relate to violations
discovered at branded distributor, reseller or ethanol blender facilities (40 CFR §
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80.28(c)) and at branded retail outlets and wholesale purchaser-consumer facilities (40
CFR § 80.28(e)).
In such cases the refiner must meet all the elements of the defense in 40 CFR §
80.28(g)(4)(i) and (ii), and must meet one of the additional elements in 40 CFR § -
80.28(g)(4)(iii). 40 CFR §* 80.28(g)(4)(iii)(B), (C), (D) and (F) set forth the “contract
defense.”
First, the refiner must demonstrate the existence of a contract with the
appropriate entity. This contract must have been designed to prevent the specific
circumstances which caused the particular violation.
Second, there must be an adequate oversight program, such as periodic sampling
and testing, to ensure compliance with the contractual obligation. This oversight defense
element has been discussed in response to other questions in this section.
With regard to the contract itself we feel it is inappropriate for EPA to set forth
specific requirements regarding the necessary provisions of such contracts. Rather, such
contracts will be evaluated on a case-by-case basis. However, the following is a partial
list of broad areas that a contract should address: -
1) The amount of sampling and testing that must be done by the entity with
whom the contract is in place (e.g., distributor).
2) Specific procedures and other specific requirements to assure that gasoline or
blend stock is not commingled with gasoline that is to be marketed in geographical areas
or time periods having lower RVP requirements, and to assure that gasoline is not
shipped to such areas or time periods having lower RVP requirements. The specific
requirements must be aimed at the circumstances as they exist with each entity. They
must be more than mere recitals that the entity must avoid violating the volatility
regulation.
3) Required training regarding the regulations and the procedures and
requirements outlined in the contract to prevent violations.
4) Appropriate responses if gasoline having excessive volatility is identified by
periodic sampling and testing or by any other means, including (where appropriate)
reporting, corrective actions, steps to prevent future violations, steps to identify the cause
of the violation, resampling and testing, increased sampling and testing, retraining, etc.
5) Appropriate responses if it is discovered that a person with whom a contract
is in place is not in compliance with the contract provisions. Such responses should
include affirmative actions which are reasonably calculated to compel the person to
comply with the contract provisions.
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**1O. Question: While the current combination of pipeline specifications and refinery
blending tolerances approximate the 0.5 psi refiner defense in the October 18, 1991
Notice of Proposed Rulemaking, we wonder why, when the test accuracy of the RVP
test is plus or minus 03 psi, such a large margin is required for our defense. Ass ni ng
we have a reasonable quality control program in place, why is the defense basis not 0.3
psi? Assuming the enforcement tolerance of 0.3 psi, why does the defense basis have to
be more than 0.1 psi?
Answer Refiners (and importers) are not required to have test results that are
05 psi below the standard to make their defense to a presumption of liability for
violations found downstream. The 0.5 psi enforcement policy contained in the preamble
to the October 18, 1991 proposed rulemaking simply allows a refiner or importer to
satisfy the test requirement of its defense by providing a test result that is 03 psi or
more below the standard, provided that the violation is not more than 03 psi above the
standard, and there is no reason to believe the party’s test result is invalid. For
example, if EPA brings an enforcement action for a violation downstream of the refiner
or importer based on a test result that is not more than 93 psi in an area with a 9.0 psi
standard, the party will be deemed to have fulfilled the test requirement of its defense if
it has a test result that is 83 psi or below (provided there is no reason to believe that.
the party’s test result is invalid). However, in the absence of such a test result, the
party, nevertheless, may satisfy the test element of its defense by presenting other test
results showing that the gasoline met the applicable standard. Whether such test results
will satisfy the test requirement of the defense will be determined on a case by case
basis. In evaluating a party’s test evidence, the Agency will consider the quality of the
party’s testing program, such as whether multiple samples were tested and whether the
party’s laboratory ran correlation tests with EPA’s or another laboratory.
Note, however, if EPA’s test results indicate that the gasoline is more than 03 psi
above the standard, the refiner or importer will not be deemed to have fulfilled the test
requirement of its defense based solely on a test result showing that the gasoline was 0.5
psi or more below the standard. However, even in this situation, it may be possible for
the party to fulfill the test requirement based on the totality of its testing evidence and
the quality of its testing program. The 0.5 psi enforcement policy, therefore, merely
provides one way in which a refiner or importer, under certain circumstances, may
satisfy the test requirement of its defense.
11. Question: When a violation is found at a retail outlet, when is the carrier who
delivered the gasoline to the retail outlet liable, and how may the carrier establish a
defense?
Answer When a violation is found downstream from a carrier (i.e., not at the
carrier’s facility), the carrier is liable only if EPA is able to show that the carrier caused
the gasoline to violate the standard. The only defense available to the carrier in such a
case is to show that it did not cause the violation or that no violation occurred. The
carrier defense at 40 CFR § 80.28(g)(1) applies only to violations found at carrier
facilities.
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•12. Question: What records are required for purpose’s of establishing a defense, and
for how long should these records be kept? What types of documents should be kept on
site?
Answer. The regulations do not require a party to keep any specific records.
However, to establish a defense, certain records will normally be needed by parties, such
as refiner test records showing that the gasoline was in compliance when delivered to
the next party downstream, and records relating to oversight testing programs.
The statute of limitations for prosecuting violations under the Clean Air Act is
five years from the date of discovery of the violation. A party therefore may wish to
keep records related to establishing a defense for five years to protect itselL
The regulations do not require that records be kept on site. EPA inspections will
be facilitated, however, if documents relating to product classification are made available
to EPA inspectors on site. This would be of particular importance where the facility
supplies both 9.0 and 7.8 psi areas, or where the product is to be used only for
blendstock, is intended for export, or is in storage. In the absence of documents that
provide this information (or other satisfactory evidence), the most stringent RVP
standard will be assumed. Having such documentation readily available to EPA
inspectors will facilitate this determination.
13. Question: How long must regulated parties maintain physical gasoline samples
taken in conjunction with an oversight program? Have sample retention requirements
changed for refinery testing? Terminals?
Answer The Agency’s policy with regard to sample retention has not changed.
As in the past, the Agency will evaluate the adequacy of a refiner’s test data and any
party’s oversight program on the basis of records of sampling and testing, rather than by
evaluation of samples of gasoline. A retained sample could conceivably be useful in
resolving a discrepancy between a company’s and EPA’s test results. Of course, the
volatility of a sample is reduced by opening the container for the first test and may be
reduced by mere storage, so that the ultimate usefulness of retained samples is
questionable. If a company desires to retain samples in the event they are needed as a
defense element, it would be best to coordinate the activity with an EPA laboratory
correlation program.
14. Question: Can a party rely on tests done by another party or by an independent
laboratory? Will a third party company assume any liability if their actions lead to
violations?
Answer. Under certain circumstances tests performed by another party or
laboratory may be acceptable, especially where the reliability of the tests is high (e.g.,
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where a carrier contracts to have a supplier sample and test product immediately after
delivery), Liability is not transferred to the third party who conducts the tests, however;
the burden remains on the regulated party to demonstrate that any testing is performed
in accordance with the regulatory requirements, and that sampling methods and -
frequency are adequate.
15. Question:. Where a single organization such as a co-op owns and operates a
refinery, pipeline, and bulk plants which receive no product from outside this system,
and where retail outlets and wholesale purchaser-consumers purchase all of their
product from the organization, can a single oversight program satisfy the requirements of
the RVP rule?
Answer In order for a refiner, carrier, or distributor to establish a defense under
the regulations, these parties must demonstrate an oversight program which includes
periodic sampling and testing. An oversight program performed by someone other than
the regulated party would satisfy this requirement so long as the sampling and testing is
carried out in a manner which adequately monitors product quality at all appropriate
places along the distribution network. In the scenario described in the question, the
refiner must demonstrate testing of all product leaving the refinery, as well as periodic
sampling at the remaining places along the distribution network (pipeline, bulk plants,
retail outlets, etc.). The results of the downstream sampling program may justify a
program of less frequent sampling, but it is unlikely that downstream sampling could be
eliminated altogether. It is difficult or impossible for EPA to state a specific sampling
frequency that is necessaly. The frequency of sampling at the bulk terminals would
depend in part on whether the system is truly closed. Moreover, the regulated parties
are familiar with their system, equipment, personnel, history of problems with quality
assurance, etc. Each of the separate regulated parties in the distribution network could
agree to use a sampling program conducted by the parent organization, but if a violation
is found by EPA and this oversight program is found to be deficient, the regulated
parties will not be able to establish the oversight element of the defense.
16. Question: If a party has adjacent facilities (different divisions of the same
company), or a company pipeline delivers gasoline to tankage owned by the same
company, do they have to test continuously at both?
Answer An appropriate sampling and testing program will depend upon the
specific factual situation involved, If product is shipped from both facilities, testing
should be done at both facilities, if product is transferred from one facility to the other
through a pipeline used by the company to transport product exclusively between the
facilities (i.e., a “tight system”) before being shipped out, testing product just prior to its
leaving the second facility may be sufficient to assure that the product complies with the
applicable RVP standard when it leaves the party’s facility. -
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Question: The Clean Air Act Amendments of 1990 provide for a new defense for
violations involving ethanol blend products. Describe this new defense and any
regulatory changes made in accordance with the statutcfty provisions for this defense.
Answer The new defense for violations involving ethanol blend products is for a
distributor, blender, reseller, carrier, retailer, or wholesale purchaser-consumer who can
demonstrate that: 1) the gasoline portion of an ethanol blend meets the applicable RVP
standaid; 2) the ethanol does not exceed its waiver condition under section 211(f)(4)
(i.e., 10%); and 3) no additional alcohol or other additive has been added to increase
the volatility of the ethanol portion of the blend. This defense provides protection from
liability if the volatility of an ethanol blend exceeds the applicable standard by more
than one psi when all of the requirements of the statute have been met. This statutorily
mandated defense is in addition to, and does not supersede, any of the other defenses
contained in the regulations.
The Clean Air Act Amendments also provide that a party may demonstrate the
elements of the new defense by production of a certification or other evidence
acceptable to the Administrator. Accordingly, on December 12, 1991, EPA amended
the volatility regulations to include the new defense and to provide that a party may
demonstrate the elements of the defense by production of a certification from the
facility from which the gasoline was received. The new defense is limited to ethanol -
blends cont iining a minimum of 9% ethanol and a maximum of 10%. The regulations
specify that, if the demonstration is made by a certification, it must be supported by
evidence that the statutory criteria for the defense have been met, such as an oversight
program conducted by or on behalf of the party alleged to be in violation, which
includes periodic sampling and testing of the gasoline or monitoring the volatility and
ethanol content of the gasoline. Such certification will be deemed sufficient evidence of
compliance provided it is not contradicted by specific evidence, such as testing results,
and provided that the party has no other reasonable basis to believe that the facts stated
in the certification are inaccurate. In the case of a violation alleged against retail outlet
or wholesale purchaser-consumer facility, such certification will be deemed an adequate
defense, provided that the party is able to show certificates for all of the gasoline
contained in the storage tank found in violation.
•18. Question: In the absence of a certification, as described above, what type of
evidence will EPA accept regarding the ethanol content of gasoline for purposes of
making a defense under section 80.28(g)(6)?
Answer The best evidence that the ethanol content of the gasoline contains at
least 9% ethanol but no more than 10% ethanol, is the result of an alcohol test
conducted in accordance with the procedures specified in Appendix F to the regulations.
In the absence of such test results, the Agency will consider the following evidence in
evaluating whether the gasoline had the proper ethanol content when it left the
blender’s facility: a) the results of a periodic testing program carried out by the ethanol
blender; b) evidence of a quality control program carried out by the blender; c) records
reflecting the actual blending of the gasoline in question, showing the amounts and types
of products blended together; d) records maintained for the purpose of the IRS tax
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exemptions for ethanol use; e) records regarding the bulk volumes of alcohol and
gasoline blendstock purchased; and f) evidence that any party downstream from the
blender added, or had an opportunity to add, additional alcohol or gasoline to the
product. Where a violation is found at the ethanol blender’s facility based upon
insufficient or excessive ethanol content, it will be very difficult for the blender to
establish a defense. Where the violation is found downstream from the blender’s
facility, the evidence described above will be considered.
•19. Question: Is it necessary for retailers and wholesale purchaser-consumers to
receive and keep certificates showing the gasoline they receive complies with the
applicable RVP standard?
Answer There is no requirement that retailers and wholesale purchaser-
consumers have certificates showing receipt of in-compliance product to establish a
defense for a violation found at their facility. These parties must show, however, that
they did not cause the violation, and an in-compliance certificate would be evidence for
such a showing. Also, as discussed above, these parties may wish to obtain certifications
for ethanol blend products to avail themselves of the certification defense against
violations involving ethanol blends.
‘20. Question: Is there any preferable terminology to be printed on bills of lading,
invoices, or certificates concerning RVP compliance with the applicable standard (e.g.,
must the exact RVP be stated)? May the certification be contained on a pipeline
shipment nomin2tion document? Do certifications which refer to unspecified future
shipments (“blanket certifications”) satisfy the defense elements relating to such
representations; and can “blanket certifications” satisfy the labeling requirement for
blendstock? Will the refusal by a supplier to provide certification remove the
requirement of the distributor who receives product that it obtain a certification of
compliance?
Answer Under the current regulations, to establish a defense, distributors,
resellers, ethanol blenders and carriers (for violations at the carrier’s facility) must (in
addition to other elements) demonstrate through bills of lading, invoices, delivery tickets,
loading tickets or other documents which represent that the gasoline in question
conformed to the standard. This defense element was ruled invalid as applied to
carriers by the U.S. Court of Appeals for the District of Columbia Circuit in National
Tank Truck Carriers v. EPA (902 F.2d 177 (D.C. Cir. 1990). Accordingly, the proposed
rule published on October 18, 1991, deletes this defense element for carriers, and also
for distributors and ethanol blenders. Although the rule has not been finalized, EPA
will not require this defense element in light of the Court’s ruling.
“Blanket certifications” would be inappropriate for identifying product that is
being shipped as blendstock. If a refiner or importer believes that a particular product
with high volatility is so clearly not gasoline that there is no conceivable way it could be
used as gasoline, that party may decide to ship the product without labeling the product
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as blendstock. Such a decision would be at the risk of the refiner or importer, however;
if someone downstream in fact sells, offers for sale, dispenses, supplies, offers for supply
or transports the product as gasoline, the refiner or importer would not be able to take
advantage of the blendstock defense if the product was not properly labeled as
blendstock. -
21. Question: If a motor gasoline cargo is transported in more than one compartment,
what are the test requirements to demonstrate compliance for the full cargo?
Answer Oversight programs would need to provide for periodic sampling and
testing of the various products handled. For a carrier or distributor oversight program,
there would be no requirement to test each compartment of each truck for every
delivery. However, because of the possibility that product carried in the different truck
compartments is not homogeneous (particularly if gasoline was splash blended in the
truck), the oversight program needs to include periodic sampling and testing of product
carried in each of the truck’s compartments separately, and not only of the truck as a
whole.
22. Question: If a facility blends finished gasoline with raffinate and ethanol either in-
line just prior to delivery to the purchaser’s truck or splash blends the components in the
truck itself what will the RVP testing requirements be for this facility for purposes of
meeting its defenses?
Answer A party that obtains finished gasoline or gasoline blending stock and
blends that product with any component other than ethanol (such as raffinate) will be
subject to the refiner liability and defense provisions. Thus, it must test each batch of
product that leaves its facility, if gasoline is blended in trucks, each truck compartment
would have to be sampled and tested separately. Branded refiners would need to
conduct additional oversight sampling and testing downstream.
Where both raffinate and ethanol are blended into the gasoline at the facility, with
the ethanol blended in-line or splash blended into trucks, the refiner would not be
relieved of its requirement to test each batch under the provisions of the current
regulations. Obviously, testing each batch of blended product would be much easier if
all components were blended and mixed prior to being released from the tanks. In the
alternative, each batch of fuel containing all components other than ethanol could be
blended and the resultant fuel tested and ethanol could be added at a separate ethanol
blender’s facility. The ethanol blender’s facility would then be subject only to the
liability and defense provisions relative to ethanol blenders. Obviously, if the would-be
refiner facility in this scenario purchases finished gasoline and elects to add only ethanol,
then only the ethanol blender liability and defense provision would apply.
23. Question: Where a branded retail outlet is supplied directly by the branded refiner
and an appropriate contract is imposed by the refiner on such retailer, would a program
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of reconciling deliveries to the retail outlet with pump meter readings (and the RVP of
delivered product is included on the delivery documents) be an acceptable alternative to
a sampling and testing program?
Answer Since the refiner must test each batch of gasoline before it leaves the
refinery, and since, in the above scenario, the refiner maintains control of the product
until it reaches the retailer, an adequate oversight program might be developed which
would include minimal sampling at the retail level. Nevertheless, in determining the
sampling frequency at the retail outlets, a number of factors should be taken into
consideration. These would include such matters as the opportunity for RVP to change
between refinery and retail outlet, prior history of problems with individual retailers, and
other factors discussed in this chapter.
24. Question: May distributors and resellers without bulk facilities establish an
adequate oversight program that does not involve sampling and testing, but that does
involve careful monitoring of amounts of product ordered, picked up, and dropped, and
includes maldng oversight contracts with retailers and monitoring retailers’ gasoline
delivery records? -
Answer Contracts with retailers (and contractual oversight), monitoring gasoline
delivery information, training , and other quality assurance measures may be useful
elements of an oversight program. However, we believe periodic sampling and testing is
necessary. If the distributor or reseller obtains product directly from the refiner and no
commingling of product can take place, the distributor or reseller may be able to rely on
the sampling and testing of the refiner, especially if a branded refiner’s oversight
program includes periodic downstream sampling and testing. If the product is received
from a terminal a trucker may be able to arrange for testing to be performed by the
termin il immediately before or after delivery.
In any event, a distributor’s or reseller’s sampling program only needs to include
periodic sampling, not sampling of all product delivered to it.
2S. Question: May distributors or resellers with bulk facilities, bui who do not
mznufacture, blend or alter product, establish an adequate oversight program by
sampling and testing once at the beginning of the season? Must all retail outlets be
sampled over the course of the season?
Answer Distributors and resellers with bulk facilities but who do not alter the
quality or quantity of gasoline, must conduct periodic sampling of the fuel in their
possession or ownership. Sampling once at the beginning of the season would be
inadequate. However, there is no regulatory requirement that such distributors conduct
sampling at the retail outlets which ultimately receive the fuel (although such sampling
may be required as part of the branded refiner’s oversight program).
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“26. Question: What is required for an adequate defense where off-spec product is
delivered by a third party on exchange?
Answer The elements required for a defense to a violation incurred becaus& off-
spec (i.e., non-complying) product was delivered by a third party on exchange would
depend on the particular party and situation involved. For example, refiners are
presumed liable (and the appropriate refiner defenses apply) for violations found at
their branded retail stations and branded distributor and ethanol blender facilities,
whether or not the gasoline was obtained through an exchange agreement. Refiners
who supply gasoline to unbranded distributor and ethanol blender facilities are also
presumed liable (and the appropriate refiner defenses apply) for violations found at
those facilities, even where the refiner obtained the gasoline on exchange from another
party. If however, the refiner can demonstrate that the third party caused the violation,
it may be able to meet the non-causation element of its defense. Other parties in the
distribution chain who are presumed liable for a violation may also be able to satisfy the
non-causation element of their defense if they can show that a third party caused the
violation by delivering non-complying product.
26. Question: The terminal operator often is not advised of the specific delivery
location of each truckload of gasoline leaving the terminal. It is common for customer-
supplied destination information to indicate only the destination state. Under such
circumstances, how can the terminal operator create a defense against presumptive
liability if the carrier delivers 9.0 psi gasoline from the terminal into a nonatt innient
area (requiring 7.8 psi gasoline)? if the terminal operator indicates on the bill-of-lading
(or other appropriate shipping document) that the gasoline is not to be marketed in
nonattainment areas, would this create a defense? If not, what more would be required
of the termin2i operator?
Answer if a violation is found downstream from the terminal and the terminal is
presumed liable for the violation, EPA will look to shipping and other commercial
documents, and any other evidence, indicating that the terminal took reasonable steps to
alert the carrier that the gasoline had 9.0 psi RVP and should not be delivered to a 7.8
psi area. Other evidence might include identification of the gasoline at the loading
racks. Obviously, the greater the effort the terminal makes to ensure that higher RVP
gasoline is not delivered to a 7.8 psi area, the easier it will be to defend against a
presumption of liability. Evidence of efforts to supply gasoline to the appropriate area
will be evaluated on a case by case basis.
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F. TEST METHODS
*1. Question: Which testing methods will EPA accept for purposes of testing
compliance with the applicable RVP standard by importers, refiners and all upstream
parties? What RVP test equipment will be recognized as establishing an acceptable
defense, if used in testing finished gasoline for (1) shipment out of a refinery, (2) receipt
and sale from a remote terminal? When will EPA publish this information? Is a
Grabner Instrument Model CCA-VPS, or a similar instrument, acceptable for use in
refinery testing of finished gasoline blends? (i.e, has EPA expanded the allowable test
methods for enforcement purposes?) Has the “referee” test procedure been
established? Is it identified as an ASTM procedure?
Answer: The current regulations prescribe two methods for purposes of testing
compliance with the applicable RVP standard: the manual tank and gauge method and
the Herzog method. Refiners and importers are required to use one of these methods
to establish that gasoline was in compliance with the applicable standard when it was
delivered to the next party in the distribution system. However, since the Herzog
method includes both an analog and a digital version, refiners and importers may use
either version for compliance testing.
On October 18, 1991, EPA published a Notice of Proposed Rulemaking (NPRM),
which proposes to allow refiners and importers to use test methods other than those
contained in the volatility regulations for defense testing if adequate correlation to the
EPA approved methodology is demonstrated. Although, until this proposed rule is
finali7ed the existing regulations require refiners and importers to use one of the
methods in the regulations for defense testing, EPA will exercise its enforcement
discretion to accept refiner and importer test results obtained using the Grabner
instrument, or other test methodologies, if adequate correlation to the digital Herzog is
demonstrated. The adequacy of such an alternative method will be weighted based on
the validity and results of such correlation data.
Under the current regulations, oversight programs may be conducted using one
of the approved methods, as well as any other method, provided that adequate
correlation to the digital Herzog is demonstrated.
2. Question: Wifi EPA adopt the ASTM methodology for the mini RVP methods and
therefore make it acceptable for EPA measurements? What is EPA ’s position on the
Grabner RVP analyzer, the Herzog Mini Reid Vapor Pressure Apparatus, and ASTM D
323? It is our understanding that, although EPA field personnel use Grabner devices to
monitor RVP, in cases of dispute, the Agency defers to one of the ASTM methods. Do
the proposed modifications to the regulations contain any provisions which address this
issue?
Answer: As indicated above, at this time, EPA has not approved the use of the
Grabner RVP analyzer, nor has it approved the Herzog Mini Method or ASTM D 323.
29
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In the NPRM published on October 18, 1991, EPA proposed several testing options,
including adding the Grabner to the existing methodologies in Appendix E, deleting the
current methodologies and replacing them with the Grabner, and making no change to
Appendix E. The NPRM stated that EPA prefers the Grabner test method for
enforcement purposes. The Grabner test methodology proposed in the NPRM is similar
to the ASTM methodology. As indicated above, however, until this proposed rule is
finalized, the methodologies in existing Appendix E remain the officially approved
methods.
3. Question: is the ASTM D 323 method the same as the Dry RVP measurement
method utilizing tank and gauges that is described in the regulations?
Answer There appears to be much confusion in the industry as to whether
ASTM D 323 is the same as the Dry RVP measurement method utilizing tank and
gauges that is described in the regulations as an approved method. ASTM D 323 and
the Dry manual method are not interchangeable as approved methods, unless
modifications are made to the ASTM D 323 equipment and the respective procedures in
order to enable it to have the same specifications as the approved method. Such
modifications are described in ASTM D 4953.
4. Question: Which testing method does EPA utilize to determine compliance with the
applicable RVP standard?
Answer EPA utilizes the digital Herzog ethod. as described in Appendix E of
the regulations, for testing of samples to determine compliance with the applicable RVP.
*5. Question: Does EPA plan to continue to use the portable Grabner analyzer for
field enforcement purposes? Will violations be issued on results obtained in field tests
using the Grabner test equipment, or will samples be sent to Ann Arbor for final
determinption as has been done in the past?
Answer EPA will continue to use the Grabner Instruments model CCA-VPS for
field screening for inspections during the 1992 volatility control season. However, if an
apparent violation is found, the sample will be sent to the Ann Arbor laboratory for
testing using the digital Herzog method.
The Grabner method has provided excellent correlation to the Herzog
semi-automatic digital method. The Grabner apparatus is a fully automatic, portable
analyzer utilizing a 4 to 1 vapor to liquid ratio chamber with pressure measurement
available at 100 F. It is similar to other RVP mini methods. EPA uses an expedited
field screening method that introduces the field sample directly to the Grabner
instrument without any sample preparation.
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**6 Question: How will variations between field measurements and the main
laboratory be treated? For example, what if a field check reveals a 9.0 psi, but an
identical sample sent by the enforcement officer to the main EPA lab measures 8.8 psi?
Answer: The results obtained by the laboratory in Ann Arbor will be used as the
basis for determining noncompliance.
7. Question: We understand that EPA uses a calculation other than ASTM in their
Grabner analyzers. Is this true? If so, is EPA’s calculation high or low compared to
ASTM? What is the calculation so that we can measure ourselves against it? Will EPA
publish the formula which it uses in the Grabner instrument? Does EPA plan to use a
different formula in 1992? if EPA proposes to change formulas, would it be before the
start of the compliance period? if changed in mid-season (assuming the new formula
results in a lower equivalent RVP), how would enforcement proceed for products
already in the market tested using the old formula? Which factor will be specified for
the Setavap (as well as Grabner) RVP methodology?
Answec As indicated above, EPA currently uses the Grabner test method as a -
screening device only. if the Grabner field test indicates an apparent violation, the
sample will be sent to the EPA laboratory in Ann Arbor for testing using the digital
Herzog method. Therefore, no correlation equation relating to the Grabner field test
method to RVP is currently used by EPA. The rule resulting from the October 18, 1991
NPRM, which has not been finalized, will address the issue of correlation equations
further.
8. Question: Where can parties get RVP testing done? Wifi EPA accredit independent
laboratories for RVP testing?
Answer’. ASTM publishes a directory of testing laboratories every year, which
may be obtained from ASTM at 1916 Race Street, Philadelphia, Pennsylvania
19103-1187.
EPA has no plans to accredit independent laboratories for RVP testing.
However, EPA will establish a record, that will be available to the public, of correlation
with a laboratory.
9. Question: Can a company who owns all stages of the refining and distribution chain
use their in-house lab if they work with EPA to ensure a quality assurance/quality
control program for their lab?
Answer A company may use their in-house lab for sampling and testing for a
quality assurance/quality control program if they use the procedures outlined in the
regulations or, for purposes of oversight testing, another method that is supported by
appropriate correlation data.
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10. Question: Assume a distributor/carrier is using a third party laboratory to perform
testing for an oversight program, and that this third party lab plans to use the Herzog
method as published in the EPA regulations. In order to protect the distributor/carrier,
must the third party lab prove correlation with the EPA lab? Will the third party lab be
liable if they do not follow the correct test method? Is correlation only required if the
third party lab intends to use other test methods?
Answer: Correlation te5ting with the EPA lab is not required. However, for any
test method used, such correlation would serve to strengthen a party’s defense to a RVP
violation. Note, however, that appropriate correlation data must be provided when other
test methods are used in an oversight program. A third party lab is not liable for RVP
violations under the regulations.
11. Question: Can a dead weight tester be used in place of a mercury manometer for
calibrating the Bourdon pressure gauge?
Answer: Although the regulations only provide details regarding the use of the
mercuiy mpnometer for calibration of the pressure gauge, EPA does not intend to
preclude the use of other calibration methods, such as the dead weight tester. As such,
a dead weight tester, with a suitable range (0-15 psi) and accuracy (+ /- 0.05 psi), is an
acceptable calibration methodology if used in a manner consistent with good engineering
practice. EPA will use its enforcement discretion to allow use of other methods that
provide equal or better results than the mercury manometer.
12. Question: To what decimal place must test results be reported for the Herzog
digital method?
Answer: The regulations require that test results be reported to the nearest 0.05
psi for the Herzog analog method and the Dry manual method. For the Herzog digital
method, twb decimal places must be reported.
13. Question: Is the acetone wash of the bomb in the dry manual method required?
Is this an environmentally unsound method for washing these instruments? Can a more
compatible wash solvent be used?
Answer: This issue will be addressed in the final rule resulting from the October
18, 1991 NPRM.
•14. Question: What ASTM distillation specifications apply to specific RVP limits?
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Answer EPA does not have a requirement regarding what distillation
specification should be used for specific RVP limits.
15. Question: What are the maximum number of samples a party can send to the EPA
lab for testing in order to assure the accuracy and repeatability of the respective test
results?
Answer EPA will accept up to three samples on a bi-weekly basis from any party
as long as the samples are accompanied by the following: lab test results, description of
the method of analysis, and name of a contact person that will receive the test results.
Other and more extensive correlation programs can be arranged by writing:
Carl Scarboro
US Environmental Protection Agency
2565 Plymouth Road
Ann Arbor, MI 48105
16. Question: Can refineries participate in correlation programs with EPA if they are
using methods other than the prescribed methods?
Answer Yes. However, this does not relieve parties of their obligation to use
approved test methods when required to do so by the regulations.
*17. Question: If EPA collects a sample at a facility that has a laboratory, will they
perform or witness testing at that facility or will all samples be shipped elsewhere for
testing?
Answer’ All samples for which a field test indicates a possible violation will be
shipped to Ann Arbor for testing.
18. Question: What happens if EPA test results of a particular sample of gasoline
reflect a higher RVP than the respective regulated party’s test results of the same
gasoline? Is a party safe from liability if it conducts single or multiple tests or performs
correlation testing with EPA?
Answer In the context of an enforcement proceeding, any party may challenge
the accuracy of EPA’s test results. A party may present test results to EPA in order to
show that a violation did not occur or to satisfy a required element of a defense that
requires presentation of test results determined through the use of appendices D and E
of the volatility regulations.
Whether a party’s test results will satisfy a required element of a defense will be
determined on a case by case basis. In evaluating such evidence, EPA will look at the
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quality of the party’s testing program to determine how much weight to give test results
in a particular case. For example, EPA will place a higher value on test results if: 1)
multiple samples (rather than a single sample) have been taken from a batch and tested;
2) the party’s laboratory has run correlation tests with EPA’s laboratory, an independent
laboratory, or a national exchange program; and/or 3) a party’s testing program includes
regular verification using a standard of known RVP. Absent any indication of an
irregularity in EPA’s sampling and testing procedures with respect to the specific
violation, EPA’s test results will be presumed to be correct in any enforcement
proceeding.
19. Question: Has EPA’s testing experience demonstrated any differences in RVP test
results using the different regulatory approved methods?
Answer EPA test results, along with some industry data, indicate that the
Herzog semi-automatic digital method generally yields RVP results which are higher
than the m2nual tank and gauge method when testing the same product. This difference
is probably due to differences in the volume and location of the pressure measurement
devices.
Question: EPA’s final (j)hase II) gasoline volatility regulations issued in 1990
contained a 0.3 psi gasoline volatility enforcement tolerance. Regarding the
enforcement of 9.0 and 7.8 RVP volatility values, will the 03 psi enforcement tolerance
continue to apply? Will EPA extend any enforcement latitude to recognize the fact that
some testing inaccuracies and variances invariably occur with gasoline RVP
measurements? Will EPA accept the + /-03 psi tolerance in enforcement actions?
Answec In the preamble to the Phase II volatility regulations, published on June
11, 1990, EPA stated that it will take enforcement action only when it measures the
RVP of the gasoline at more than 03 psi RYP greater than th& applicable standard,
provided that the responsible party measured the RVP at or below the standard. For
example, if EPA measures a sample of gasoline 9.3 psi or less in an area with a 9.0 psi
standard, it will not bring an enforcement action for the violation, provided that the
responsible party measured the gasoline’s RVP at or below 9.0 psi. (S also answer to
question 21, below.) If, however, EPA measures the gasoline above 93 psi, it may bring
an enforcement action. At this time, EPA is not changing this enforcement tolerance
policy. EPA believes that this tolerance level adequately compensates for testing
variances that occur with RYP measurements. However, EPA reserves the right to
modify the policy if additional information indicates that a change is appropriate.
Question: It is our understanding that the 03 psi enforcement tolerance was
based upon the accuracy of the RVP test itself. Therefore, as long as our refinery
laboratory’s RVP test shows the gasoline to be in compliance, it is in compliance as long
as the next party in the distribution chain retests the gasoline and finds its RVP to be
less than 03 psi above the standard. However, EPA has stated that a carrier should
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not accept gasoline where the refinery tested the gasoline at or below the standard but
the carrier’s (or other party’s) oversight testing shows the RVP to be above the standard
(even if less than 0.3 psi above the standard). How does one determine which test is
accurate? At what point can the 0.3 psi test tolerance be applied? Which parties can
use the tolerance?
Answer: If a carrier tests the gasoline to be above the applicable standard but
within the 0.3 psi enforcement tolerance, it need not reject the gasoline provided that
the average of all test results indicates that the gasoline meets the standard (in this case,
where the carrier’s test data averaged with the refiner’s test data indicates that the
gasoline is at or below the standard), and each individual test result (refiner or carrier)
does not exceed the applicable standard plus the enforcement tolerance of 0.3 psi. if,
for example, a carrier tests the gasoline to be above 9.0 psi in a 9.0 psi standard area
(but within the 0.3 psi tolerance), the carrier should determine whether the average of
its test result(s) and the refiner’s test result(s) is above or below 9.0 psi. The carrier
should accept the gasoline only if the average is 9.0 psi or below. The more the
refiner’s test data indicate confidence of the mean RVP not exceeding the standard,
therefore, the less likely it is that a carrier’s test result, when averaged with the refiner’s
test result(s), will produce an average that is above the standard. Note, however, that
the refiner test results to which we refer do not include the test data obtained during the
in-line blending process.
* 22. Question: How will EPA allow for the variance at the next level of distribution?
Specifically, if a refiner’s test is 02 psi below the standard and a carrier tests at 0.1 psi
above the standard, and subsequently a terminal tests at 0.1 psi or 0.2 psi above the
standard, will the testing variance still be allowed?
Answer: A terminal need not reject the gasoline if the average of the terminal’s
test results, and any test results obtained by the pipeline (or other carrier supplying the
terminal) immediately prior to shipping the gasoline to the terminal, is at or below the
applicable standard, provided that each individual test results does not exceed the
applicable standard plus the enforcement tolerance of 03 psi.
**23, Question: Given that a refiner has a batch of gasoline in one tank, there exists
the possibility of two or more fungible pipeline companies receiving product from this
common tank.
a. Which pipeline company’s RVP measurement is averaged with the refiner’s
tests to determine compliance?
b. Which party is responsible for collecting the RVP measures and maintaining
the historical file on the measurements?
c. What occurs if the refiner and one pipeline company test the tank with
acceptable results but the second pipeline company finds the RVP in excess of the
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standard? Is it a requirement to notify all parties involved in the testing of the tank of
the high result?
Answer: Regarding question TM a”, each pipeline company is required, at a
minimum, to conduct oversight testing of the gasoline. If any pipeline tests the gasoline
above the standard (but within the tolerance), it should determine whether the average
of its test result(s) and the refiner’s test result(s) is at or below the applicable standard
and whether any test is above the standard plus the 0.3 psi enforcement tolerance.
Regarding question “b”, refiners are required to produce test results showing that
the gasoline was in compliance when it left the refinery (or delivered to the next party in
the distribution chain, depending on the downstream facility) to make their defense to a
presumption of liability. Therefore, refiners will want to retain records of these tests for
defense purposes. Similarly, a pipeline is required to provide evidence of an oversight
program, which would include its test data, to make a defense to violations found at its
facility. If a carrier tests the gasoline to be above the standard (but within the 0.3 psi
tolerance), and the average of the refiner’s and carrier’s test data is within the standard
and no test is above the standard plus the 03 psi enforcement tolerance, presumably,
the carrier will want to retain the ifie on the measurements in the event EPA also tests
the gasoline above the standard. -
Regarding question “c”, if the refiner and one pipeline test the gasoline with
acceptable results and a second pipeline finds the RVP in excess of the standard, it
would seem prudent for the party(ies) to do additional testing. Although the volatility
regulations do not require a party to notify another party of its testing results, a refiner
in this scenario may wish to notify the second pipeline of the high RVP results so that it
can do additional testing.
24. Question: Given that a batch of gasoline is tested with satisfactory results at a
refinery and the product is shipped on a fungible pipeline, does the gasoline require
further testing when transferred to another fungible pipeline? If the gasoline is found to
exceed the standard plus the test tolerance at the transfer point between the two
fungible pipelines, what is the procedure for handling the product at that point?
Answer: To make its defense to a violation found at its facility, each pipeline
carrier must have an oversight program in place, which generally will include periodic
sampling and testing at a minimum. If the gasoline is tested to be above the standard
plus the 03 psi enforcement tolerance at the point of transfer between two fungible
pipelines, the company in control of the gasoline at that point should take steps to
ensure that the gasoline is not distributed until or unless it can be blended to the proper
RVP level, If the gasoline is tested to be above the standard, but not above the
standard plus the enforcement tolerance, the company should determine whether the
average of its test result(s) and any test result(s) obtained immediately prior to delivery
by the pipeline that transferred the gasoline is above the standard, and/or whether any
single test result exceeded the standard plus the tolerance. If so, the carrier should not
distribute the gasoline until or unless it can be blended to the proper RVP level.
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“25. Question: When a fungible pipeline company receives a batch of gasoline, are
there any requirements on when the sample from the batch should be tested? (e.g., -
mid-point of receipt, tank test after receipt, other?) Are there any limitations on size of
the batch.
Answer There are no requirements concerning when a sample should be tested
or limitations on the size of the batch for purposes of oversight testing. Each company
must determine what steps are necessaxy for effective oversight, given the company’s
particular operation.
“26. Question: In many cases, a refinery batch passes through several other systems,
pipelines and/or tankage, before entering a pipeline. We understand that only refiner
and pipeline results are used to establish the average RVP. Entities downstream may
establish oversight programs but those results do not become part of the average. Does
EPA concur?
Answer Each party in the distribution chain is responsible for the gasoline that it
distributes to the next party in the chain. A party is required to have an oversight
program in place to defend against a presumption of liability. If party tests gasoline
to be above the standard, it should not distribute the gasoline unless the average of its
test result(s) and any test result(s) obtained by the party from which the gasoline was
received, conducted immediately prior to delivery, indicate that the gasoline is at or
below the standard, and that no single test exceeds the standard plus the enforcement
tolerance.
*s27. Question: For fungible batches where product is received from a number of
shippers at a number of locations, what test results are to be used — every test from
every shipper?
Answer: As indicated above, if a party tests the gasoline to be above the
standard (but not above the standard plus the enforcement tolerance), it should
determine whether the party from which the product was received conducted any tests
on the product prior to delivery. If so, the party should determine whether the average
of all the tests indicates that the gasoline meets the standard (and no single test is above
the standard plus the enforcement tolerance). If the other party does not have test
results on the gasoline, the party should determine whether the average of its test results
indicate that the gasoline meets the standard. Where gasoline from various shippers is
commingled before the party receives it, and the gasoline from any particular shipper
cannot be tested independently, the party may average the test result(s) of the
commingled product with test result(s) obtained by the various shippers to determined
compliance.
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“28. Question: If a refinery ships a large batch of gasoline to a remote terminal and
the batch is split into two or more tanks, how will the, RVP averaging with the pipeline
company work in this case?
Answer Each party in the distribution chain is responsible for the gasoline-it
distributes to the next party in the chain. If a terminal receives a large batch of gasoline
from a refinery via a pipeline carrier, and tests the gasoline to be above the standard
(but within the standard plus the enforcement tolerance), it should average its test
results, whether taken before or after it is split into two tanks, with any test results the
pipeline had obtained prior to delivery to the terminal to determine compliance.
Whether the terminal tests the gasoline before or after it is distributed into different
tanks, would depend on the type of oversight program the terminal has in place.
Question: There is some confusion developing in the marketplace concerning
which other ASTM specification should be associated with the Region 1 and Region 2
specifications? We believe that the regulations alter only the RVP specification.
Therefore, the ASTM distillation and Vapor/Liquid Ratio specifications for Class A, B,
C, D and E gasoline are unchanged because Region 1 and Region 2 RVP specifications
only supersede the old ASTM RVP specifications for all classes. Some are erroneously
saying that the specifications that used to apply to a 9 psi (ASTM Class A) should now
apply to both Region 1 and Region 2 gasoline. Can EPA make a statement that they
are only changing the RVP specification in order to eliminate this confusion?
Answer: The ASTM distillation and Vapor/Liquid Ratio specifications for Class
A, B, C, D and E gasoline for at least one of the Seasonal and Geographical Volatility
Classes as specified in ASTM Standard D 48 14-88 are required under the “Substantially-
Similar” Rule [ 56 FR 53521.
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39
G. SAMPLING METhODS
1. Question: What sampling procedures are authorized by EPA?
Answer Generally, EPA restricts sampling procedures to one of the procedures
prescribed in the regulations. However, the regulations provide that “alternative
sampling procedures may be used if a mutually satisfactory agreement has been reached
by the part i [ ies] involved and EPA and such agreement has been put in writing and
signed by authorized officials.” 40 CFR Part 80, Appendix D, §11.1. If the volatility
sample collected by any of the prescribed procedures is found to exceed the standard,
then the sample will be considered in violation.
*2. Question: Does EPA have a sampling method preference?
Answer At retail stations and wholesale purchaser-consumer facilities, samples
are taken from the pump nozzle using the procedures specified in the regulations.
For large storage tanks (non-retail or wholesale purchaser-consumer tanks), there
are a number of sampling methods specified in the regulations. The ideal method for a
given storage tank depends upon the conditions presented by the tank configuration,
level of product, and presence or possibility of product stratification.
If the possibility of product stratification exists, “spot samples,” or “tap samples”
using suitable taps, should be collected from the “upper,” “middle,” and lower” levels of
the tank contents. Also, where stratification is known to be problem, a “top sample”
should be collected. This would assure compliance for the top portion of a bottom-fed
storage tanig which is most likely to contain unmixed layers of left-over “winter” gasoline.
If the tank is documented to be well blended and only one sample is to be used to
represent the entire contents, “all-levels” or- “running” samples are equally preferred. If
all-levels or running samples cannot be obtained due to the storage tank configuration
or equipment problems, then a middle sample, or a tap sample taken from a suitable
tap nearest to the middle of the tank contents, is an appropriate substitute.
In circumstances where it may be difficult to obtain all-levels or running samples
within the 70% to 85% full requirement, an all-levels or running sample is still preferred
over the middle sample to assure accurate representation. These circumstances include
storage tanks with product inventory of less than 5 feet, tank trucks, tank cars, and
barges.
*3• Question: What level does EPA prefer a sample be taken from a tank equipped
with operating mixers?
Answer. The possibility of stratification should be assumed unless otherwise
documented even on tanks equipped with operating mixers. Therefore, upper, middle,
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40
and lower samples should be collected from tanks with mixers until documentation exists
showing that a sample taken from anywhere in the tanj is representative of the entire
contents.
4. Question: Although continuous sampling is required for pipelines, the regulations
are vague on what a continuous sample represents. One interpretation is that the
sample should be representative of the product flowing past the probe at the time the
sample is taken. Another interpretation is that the sample is representative of the entire
batch. Which interpretation is correct?
Answer: Generally, EPA would consider a sample collected continuously during
the entire time the batch moved past the sampling probe to be representative of the
entire batch, as we do with a running sample of a tank.
5. Question: Does EPA intend to verify industry compliance with proper sampling
procedures as part of the volatility enforcement program?
Answer: In general, EPA does not plan to verify sampling procedures used by.
industiy. However, in the context of an investigation as to the cause of an apparent
violation, it is likely that EPA will evaluate the sampling procedures used to determine
the validity of the test results presented by the alleged violator. Furthermore, during on-
site inspections, if EPA notes incorrect procedures used by industry personnel, then it
generally will inform industry personnel of such improper procedures.
6. Question: Will EPA issue a report or test results from a collected sample if no
violation is found?
Answer. Yes, a copy of the field inspection report including the results of any
field screening tests will be left with the person in charge (or designated) at the
conclusion of each facility inspection. The only exceptions would be instances in which
laboratory samples are collected for confirmation of ethanol content (when required) or
quality assurance of the field screening process. EPA will also accept requests for
results of any laboratory tests.
*7, Question: Is EPA considering new sample size requirements?
Answer EPA will continue to use one quart “Boston Round TM glass containers
with teflon lined phenolic screw caps for the 1992 volatility season. These sample
containers will be plastic coated when collecting “nozzle samples” at retail gasoline
outlets and wholesale purchaser-consumers. In the proposed revisions to the volatility
regulations published on October 18, 1991, EPA proposed to approve the use of smaller
sample containers. The use of smaller containers, 4 oz. being the minimum size, would
be optional. The only new mandatory requirements regarding sample containers under
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41
the revisions, as proposed, are sample closure specifications which are designed to
prevent loss of vapor pressure prior to testing.
8. Question: Is there an EPA approved video tape for sample procedure training?
Answer
EPA is aware of industry generated training tapes on RVP sampling. The Agency has
no certification or approval process for such materials.
*9• Question: Will EPA take multiple samples for analysis, do duplicate analyses of
samples, or take joint samples with facility operators?
Answer: For the 1992 control season, EPA plans generally to collect a single
sample per tank to screen for RVP compliance. Additional samples may be collected
where product stratification is suspected or for laboratory analysis to assure the quality
of the field screening process. Facility operators may wish to take a duplicate sample
for their own purposes. If requested, the EPA inspectors will provide assistance in
obtnining such duplicate samples.
Field screening tests will consist of one test per sample using the field Grabner
vapor pressure apparatus. If the results of the screening procedure indicate that
noncompliance is a possibility, more samples will be collected. For above ground
storage tanks, as many as six additional samples, consisting of “upper,” “middle,” and
lowe? samples for both field confirmation and laboratory analysis, will be collected. At
retail outlets, two additional samples of a product will be taken when field screening
indicates the possibility of noncompliance: one sample to confirm the field screening
results, and one sample for laboratory analysis.
Until the October 18, 1991 proposed revisions to the regulatory test methods are
finalized, laboratory analysis will be conducted with the digital Herzog instrument using
the current regulatory methodology. Duplicate (actually replicate) analyses will be
performed in the laboratory on individual samples for quality control purposes.
**1O Question: How will EPA enforcement address tank stratification of RVP?
Answer: As we stated in past seasons, product stratification in storage tanks
should be prevented where noncompliance may occur in a portion of the tank. EPA
inspections will be checking for stratification particularly during the early portion of the
control season. When inspections document portions of a tank out of compliance, EPA
will take enforcement action; however, penalty assessments will be based only on the
volume of product determined to be in violation.
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H. INSPECIIONS
*1. Question: Where will EPA focus its enforcement efforts; how will EPA target
particular facilities for inspection; and who will conduct EPA sampling this summer?-
Answer
EPA conducts inspections at all regulated facilities; however, the main targets are
refineries, terminals and retail outlets. Inspections are conducted primarily by
authorized contractor personnel and EPA staff on a random basis. For the 1992 season,
EPA will pay particular attention to facilities in and around areas with the 7.8 RVP
standard to assure that product designed to meet the 9.0 RVP standard is not delivered
to the 7.8 RVP areas.
*2. Question: With what frequency does EPA anticipate sampling pipeline carriers vs.
pipeline terminals vs. retail stations?
Answer EPA plans to inspect all types of facilities. The main targets of EPA
inspections, however, will be refineries, terminals, and retail outlets..
*3, Question: Will EPA conduct audits of upstream facilities, including pipeline
terniinnlc? Will refineries be audited first?
Answer. The Agency concentrates on sampling and testing by EPA and its
contractors as the primaiy means of monitoring compliance. Starting with the 1992
season, field inspections will include record reviews at terminals bordering 7.8 RVP
areas to ensure correct deliveries of product intended only for 9.0 RVP areas. EPA
supplements the field inspections with audits of any regulated facility during
investigations of noncompliance to determine the full extent and source of violations.
**4 Question: Will gasoline volatility enforcement criteria or procedures be different
in ozone nonattainment areas vs. attainment areas?
Answer Enforcement criteria will be the same in all areas of the country.
However, as indicated above, during the 1992 control season, field inspections will
include more thorough investigation at terminals within the delivery range of 7.8 RVP
areas to ensure correct deliveries of product designed only for 9.0 RVP areas. EPA will
use this information to target downstream inspections if nonconformities are found.
*5. Question: How are EPA inspections conducted?
Answer The authorized EPA inspectors will clearly identify themselves, present
their appropriate credentials and state the purpose and nature of the inspection before
43
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44
beginning their procedure. Generally, one sample per storage tank of fmished product
will be screened in the field for RVP compliance. If the field screening test indicates a
potential violation, a laboratory sample will be collected and analyzed in accordance
with the regulatory procedure. When EPA inspects an upstream party that supplies
facilities in both 9.0 psi and 7.8 psi standard areas, the inspectors will ask to see
documents indicating where the gasoline is being shipped and other evidence indicating
that the party has taken steps to ensure that the gasoline will be shipped to the proper
area.
*6 Question: What information can refiners and other regulated parties provide to
expedite inspections?
Answer’ At the start of an inspection, a party can advise EPA concerning
applicable safety requirements for obtaining samples from the storage tanks. It can also
provide information concerning the type of storage tanks in which the finished product is
stored (e.g., floating roof tank or fixed roof tank) and the type of gauge tubes that are
used (perforated or solid). At the time of the inspection, a party should provide
documentation indicating whether product is blendstock or finished gasoline and the
intended destination of the gasoline (i.e., 7.8 psi or 9.0 psi area). This documentation
should be that which is generally accepted commercially within the industry to describe
the nature and status of such product. To expedite record reviews at terminals and
refineries, records of sales or other commercial documents should be available and
separated by products designed to meet the 7.8 and 9.0 RVP standards.
7. Question: How will EPA inspect unmanned terminals that are entered with “keys” by
various purchasers lifting products from common storage?
Answer’ EPA will coordinate with the terminal owner/operator to gain access to
the terminal and records relating to product stored at the terminal.
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I. NOTIFICATION OF VIOLATIONS
*1. Question: What procedure will EPA follow to notify companies of violations; to
resolve violations?
Answer: EPA generally will inform all identifiable parties who have potential
liability when a field test indicates gasoline may be in violation of the applicable
standard. EPA subsequently will issue a Notice of Violation to the presumptively liable
party(s) identifying the violation and setting forth a proposed penalty amount A party
then may present evidence to establish that the violation did not occur or to support a
defense as set forth in the regulations. If the party is able to make such a showing, EPA
generally will drop the action. If it is not, EPA will attempt to negotiate a’settlement
with the party. If negotiations for settlement fail, depending on the nature and
magnitude of the case, EPA will either initiate an administrative action, which affords
the liable party an opportunity for a hearing before an administrative law judge, or refer
the case to the Department of Justice with a recommendation that a complaint be filed
in federal district court to recover the statutozy penalty.
2. Question: How quickly will EPA notify parties of violations?
Answer: EPA will contact parties as soon as possible after the field test results
indicate that a violation has occurred. The Notice of Violation is usually issued within a
month of the laboratory verification of the violation.
*3• Question: What are the penalties for an RVP violation? Will the amount of a
penalty take into account the RVP level and volume of product in violation?
Answer The statutory penalty for violations of § 211 of the Clean Air Act, under
the authority of which the volatility regulations are promulgated, is up to $25,000 per
day per violation and the amount of the economiô benefit or savings resulting from the
violations. Under EPA’s volatility penalty policy, proposed penalties are based upon the
gravity of the violation (amount of RVP over the standard and volume of product in
violation), adjusted for prior violations and, in certain cases, business size.
**4 Question: Some companies’ experience in the volatility control program has been
that, in general, no one in the distribution system is notified by the Agency when
compliance testing at the retail level takes place. Consequently, opportunities to react
promptly to incidents of alleged noncompliance are lost. While they recognize the
Agency’s right to conduct this testing, they believe that it is EPA’s responsibility (in
order to provide the most benefit to human health and the environment) to notify the
retail station management of a sampling event and allow them the opportunity to obtain
a split sample. EPA should comment on this recommendation.
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46
Auwer- As indicated above, EPA will inform all identifiable parties who have
potential liability as soon as possible after a field test indicates the gasoline may be in
violation of the standard. EPA will allow any retailer to obtain a split sample if the
retailer so desires. Official laboratory test results will be provided to any regulated party
as soon as available, if requested.
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J. REMEDIAL ACTION
*1. Question: What should a party do if it discovers product having excess volatility
during the course of an oversight program? How may a party remedy such a violation?
Can the high volatility gasoline be transported or sold? Will EPA allow or require
reblending? Will EPA close the facility? Will EPA initiate an enforcement action
based upon the violation? Is the party required to notify EPA? What if the product is
already downstream?
Answer: The company should promptly take steps to remedy both the violation
and the conditions which caused the violation. The violation can be remedied in one of
several ways, including the following: a) reduce the volatility by blending lower volatility
product with the high volatility gasoline; b) transport the gasoline to a geographic area
having a volatility standard with which the gasoline complies; c) store the gasoline until
the compliance period ends; d) transport the gasoline to a refinery or other facility.
Transportation is appropriate only for the purpose of correcting the high volatility; and
storage is appropriate only when high volatility gasoline was discovered through an
oversight program, the stored gasoline is sealed until a time when the product can be
distributed, and the gasoline is clearly designated as product that is not intended to be
sold, supplied, dispensed, transported or distributed.
EPA has no authority to require any of these remedial actions, or to close a
facility. EPA will, however, exercise its discretion and will not initiate an enforcement
action on the basis of high volatility gasoline discovered by a company, providing the
following conditions are met: a) the violation was the result of an accident or a mistake
(i.e., was not based on a decision to sell, dispense, supply or transport high volatility
gasoline, or an action in disregard of the regulations); b) the company completely
corrected the violation (e.g., upon discovery the company took all steps possible to
assure the high volatility gasoline which was on hand or which had already been
distributed downstream was immediately corrected); c) the company took appropriate
action to ensure future violations will not occur (e.g., where a refiner discovers high
volatility product caused by a reseller’s failure to comply with product handling
procedures contractually imposed by the refiner on the reseller, the refiner took steps to
compel compliance with the contract); and d) the remedial actions are not the result of
an EPA inspection or investigation.
Any sale, supply, offering for sale or supply, dispensing, or transport (other than
transport only to correct a violation) would constitute continued additional violations of
the regulations. EPA is unwilling to grant a waiver to allow use of high volatility
product.
2. Question: What should a company do if it is notified that EPA has discovered a
violation? Will any remedial action affect the penalty?
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48
Answer: The company should immediately take remedial actions to correct the
violation and the conditions which caused the violatioti (as described in the previous
question). Such actions will be considered by EPA in mitigating any penalty imposed
because of the violation.
3. Question: What will the Agency’s procedure be for allowing (or not allowing)
gasoline sales when high gasoline RVP is indicated by the field test instrument.
Answer: In the event EPA inspectors inform a company that a volatility field test
shows gasoline has excess volatility, the Agency views this as notice to the company of a
possible violation of the regulations. While the regulations do not give EPA the
authority to stop the sale of non-complying product, if the EPA laboratoiy confirms the
gasoline has excess volatility, the company will be entitled to penalty mitigation only if
appropriate remedial action was taken as soon as the company was told of the failed
field test.
4. Question: What is the procedure to verify that a tank is back in compliance once
corrective action has been taken?
Answer: A determination of the RVP of the tank following EPA sampling and
testing methodology is recommended.
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K. STATE VOLATILITY PROGRAMS
1. Question: What is the effect of EPA’s regulations on state volatility regulations?
Will EPA preempt state regulations? -
Answer EPA’s regulations preempt state and local volatility regulations unless
one of the following exceptions apply: -
a. The state control is identical to the federal controL
b. The state regulation has been approved by EPA as a State Implementation
Plan (SIP) amendment which is necessary to achieve a national ambient air quality
standard.
c. The control was prescribed by a state which received a section 209(b) waiver.
(Only California has received such a waiver.)
d. The state control is not done for the purpose of motor vehicle emission
controL
**2. Question: What is the current status of Colorado’s request for a change in the
federal RYP standard from 7.8 psi to 9.0 psi for 1992 arid 1993?
Answer. EPA has proposed to approve Colorado’s request for a change in the
federal RYP standard from 7.8 psi to 9.0 psi in ozone nonatt inment areas in Colorado
for the 1992 and 1993 volatility seasons. EPA has granted a stay of the 7.8 psi standard
until September 15, 1992. By that time, EPA expects its proposal for a relaxation of the
7.8 psi standard to 9.0 psi to be finalized.
3. Question: Will EPA delegate enforcement authority to the states? Are states going
to do any testing?
Answer EPA cannot delegate its enforcement authority to the states. In some
instances, states with their own approved volatility standards may inspect for violations
of state RVP standards and enforce them themselves.
$*4 Question: Is it possible for states and the EPA to conduct independent
compliance testing at a given facility?
Answer Yes.
*5• Question: In states in which EPA has approved a SIP that calls for more stringent.
RVP specifications than the federal standard, will EPA relinquish enforcement of
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volatility controls entirely to such states? If not, will EPA test facilities for compliance
with the federal RYP specification or the lower state’ RVP level?
Answer In 1992, the federal standard will be 9.0 psi, or 7.8 psi in ozone
nonattainment (or former nonattainment) areas located in states designated to have a
7.8 psi standard in the Phase II regulations, making the federal standard the same or a
more stringent standard than the approved state SIPs. However, both the federal and
state standards are enforceable where there is an overlap of jurisdiction, such as in any
state or area that has had final approval of a SIP revision and in states having standards
that were promulgated for purposes other than motor vehicle emission control.
Therefore, where both state and federal standards are in place, the regulated industry is
required to comply with both standards. EPA will test regulated facilities in such states
and will enforce the federal standard.
6. Question: To the extent that any aspect of an approved state regulation is more
stringent than the EPA rules, will the more stringent portion of the state rules continue
to apply?
Answer Yes. For example, the federal standard is 9.0 psi for all upstream
parties in all states during the month of May. Where a state SIP provides for a more
stringent standard for May, the state rule continues to apply.
*7 Question: Several states have regulated gasoline to meet ASTM specifications for
several years for reasons not related to the environment. In these states, will the EPA
rule preempt state ASTM specifications if the ASTM limit is more restrictive?
Answec As indicated above, the federal standard does not preempt the state
standard. However, even where an aspect of the state standard is more stringent, EPA
can enforce a violation of its less stringent standard. -
•8. Question: Wifi states with unapproved SIPs, or pending SIP requests for approval,
be allowed to sample, test and enforce state RVP regulations?
Answer States whose regulations are for the purpose of emission control cannot
enforce their regulations unless EPA approves a SIP amendment by finding that the
control is “necessary to achieve an ambient air quality standard or the state standard is
identical to the federal standard (or one of the other preemption exceptions described in
answer to Question J.1 is satisfied).
*9• Question: Will states with approved SIP revisions be enforcing their regulations
using testing procedures that differ from EPA’s?
Answer As part of the SIP approval process, EPA requires states to use an EPA
approved method of testing. Currently two methods are included in the regulations as
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51
approved by EPA. the ASTM Annex 2 Modification of Method D-323 and the Herzog
Semi-Automatic Method.
1O. Question: Why does the EPA not develop a cooperative effort with the state
petroleum inspection programs. This would be an effective method of enforcement that
is already in place.
Answer: EPA is willing to work with the states to develop state enforcement
programs and to train state inspectors.
In past years, EPA has made an effort to coordinate its sampling and testing program
with state programs.
*1L Question: Will EPA’s pump labeling requirement for ethanol blends preempt state
labeling requirements?
Answer: EPA no longer requires pump labeling for ethanol blends for volatility -
purposes. 56 FR 64704 (December 12, 1991). However, section 211(m)(4) of the
Clean Air Act, as amended, requires EPA to promulgate labeling regulations for state
oxygenated gasoline programs under section 211(m). EPA has proposed labeling
regulations in the Federal Register. See 56 FR 31148 (July 9, 1991). Final labeling
regulations will be issued shortly. EPA expects states to adopt the statement set forth in
the oxygenated gasoline labeling regulations without alteration or addition. EPA’s
labeling regulations do not specify the oxygenate used. A state may require that
additional information (for example, type of oxygenate) be induded on the pump label
as long as that information does not alter the statement required by EPA’s regulations
in any way.
I2. Question: Is there a vehicle in the federal volatility regulations that would allow
EPA to control the state RVP regulations such that the patchwork of state and city
regulations could be eliminated resulting in a consistent set of regulations for contiguous
states in a logistical region?
Answer: EPA evaluates the state volatility SIP requests individually. The
Agency’s determination is based upon whether the state regulation is “necessary to
achieve” a national ambient air quality standard. EPA is not able to use the SIP review
process to effect changes to the state regulations which do not impact the “necessary to
achieve” determination. Generally, however, the federal standard in 1992 will be as
stringent or more stringent than the state standard and regulated parties will be required
the meet the federal standard.
13. Question: New Jersey allows for a testing tolerance while several other
northeastern states do not. Does EPA plan to require consistency in the testing
tolerance area in the states?
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Answen EPA will leave the issue of testing tolerance to each state.
**14. Question: Do any regulatory variance measures exist in the event new gasbline
RVP regulations cause fuel shortages or severe economic penalties in some states or
area , especially rural locations?
Answer The regulations do not provide for regulatory variance measures. As
discussed in Section B, question 1, above, the Clean Air Act Amendments of 1990
mandate an RVP standard of 9.0 psi, and allow EPA to impose a standard lower than
9.0 psi only in ozone nonattainment and former nonattainment areas. States, however,
may request that EPA adjust their standard to respond to local issues, within the
statutory limits. (See Section K, question 2, above, regarding Colorado’s request for a
change in standard.)
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Section J Document 15
Interim Draft AMCC Record-Keeping Policy
07/13/92
15
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e l ’ 4
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
OFFiCE OF -
July 13, 1992 AIR AND RADIATION
MEMORANDUM
SUBJECT: Interim Draft AMCC Record-Keeping Policy.
FROM: George E. Lawrence, Jr., Chief
Eastern Field Office I
TO: EFOI Staff
Please use the attached interim draft AMCC record-keeping policy instead of
the policy in the draft Tampering Policy to sort out what constitutes a record-
keeping violation, and which are level 1 and which are level 2. The dollar limits in
the Tampering Policy would continue to apply.
A separate issue is which record-keeping violations are sufficiently
minimis as to not be enforced. I hope that an office policy will evolve for such
minimis violations, by working through the first iterations of cases. If you discover
facts that would amount to a record-keeping violation, but do not believe the count
should pursued on minimis grounds, please let me know.
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NON-RECORD-KEEPING “SUBSTANTIVE” AMCC VIOLATIONS
A. Misapplication (e.g., 2-way instead of 3-wa )
B. No adequate reason (i.e., cc missing, State determination, or other need)
C. Warranty viol (i.e., AMCC on vehicle under 5/50)
II. RECORD-KEEPING VIOLATIONS
A. LEVEL 1
1. Evidence that an AMCC was installed, but cannot determine if a
“substantive” violation occurred, when considering both:
a. The information on the face of the shop’s record (i.e., missing
vehicle year/mileage or reason statement);
b. Customer follow-up (i.e., missing customer address/phone number
on shop’s records).
2. In the case of a shop that does j have any records indicating AMCC-
installations, an untagged cc that was removed within the past 15
days, or evidence it was never tagged.
B. LEVEL 2
1. Shop’s records are missing vehicle year/mileage, or reason statement,
but sufficient information is present in shop’s records to locate the
customer (i.e., can determine whether “substantive” viol occurred only
through customer follow-up). ( Nste : there is no requirement under the
AMCC policy for shops to record the catalyst type or part number.
Therefore, a record that is missing only catalyst type information is not
any violation, even though the vehicle must be inspected to determine
that the proper catalyst type was installed.)
2. Can determine that no “substantive” violation occurred from the face of
the shop’s records (i.e, shop’s records indicate that AMCC type was
proper, that the vehicle was outside 5/50, and that there was an
appropriate reason for the removal), but the customer cannot be
contacted to verify these entries due to missing customer
address/phone number.
3. A warranty card not filled out by the shop.
4. In the case of a shop that does have records indicating AMCC
installations, an untagged cc that was removed within the past 1 5
days, or evidence it was never tagged.
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Ssctlon J Docum.nt 16
civil Penalty PolIcy for Administrative Hearings
01114193
16
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ü1’
ji6
O
C UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
_____ WASHINGTON, D.C. 20460
4 p o1t
IMI A Q 2 OFFICEOF
AIR AND RADIATION
MEMORANDUM
SUBJECT: CIVIL PENALTY POLICY F DMINISTRATIVE HEARINGS
FROM: Mary T. Smi , ir to
Field Operat dcS Division
TO: Field Opera n and Support Division Personnel
This memorandum describes the civil penalty policy for five
separate areas of enforcement administered by the Field
Operations and Support Division (FOSD). Enforcement categories
included are volatility, tampering and defeat device, unleaded
gasoline, section 211(f) violations, and lead phasedown. These
policies follow the guidelines of the Agency’s Policy on Civil
Penalties and A Framework for Statute-Specific Approaches to
Penalty Assessments (EPA General Enforcement Policies # GM — 21
and 22) (the “EPA Policy”).
The EPA Policy establishes deterrence as the primary goal of
penalty assessment. In addition, it recognizes that penalty
assessment should provide for fair and equitable treatment of the
regulated community and for swift resolution of environmental
problems.
The EPA Policy specifies that penalties should be
established and adjusted based upon a number of factors,
including the gravity of the violation and economic benefit to.
the violator; the violator’s degree of cooperation and
willfulness; history of noncompliance and ability to pay; and
other factors unique to the case.
Printed on Recycled Paper
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VOLATILITY CIVIL PENALTY POLICY FOR ADMINISTRATIVE KEARINGS
I. INTRODUCTION
This section describes the FOSD policy for determining
penalties for violations of the volatility regulations for
gasoline. See 40 CFR sections 80.27 and 80.28 and Appendices D,
E, and F as amended at 56 FR 64704 (December 12, 1991).
Parties covered by these regulations include refiners,
importers, ethanol blenders, carriers, resellers, distributors,
retailers, and wholesale purchaser-consumers.
II. CALCULATING THE PENALTY
The penalty for volatility violations is based upon the
magnitude of the violation (the number of gallons of gasoline
which are in violation) and the severity of the violation (the
degree to which the gasoline exceeds the appropriate standard);
adjusted for prior violations. For certain cases where the
magnitude of the violation is not known or where the penalty
calculated based upon the violation’s magnitude is not
sufficiently large to constitute an appropriate deterrent
(generally for violations found at retail outlets and’ wholesale
purchaser-consumer facilities), the penalty is derived from a
table which takes into account the severity of the violation, the
history of prior violations, and the violator’s business size.
A. Gravity of the Violation
Since the reduction of fuel volatility is a crucial
component of the Agency’s effort to control and prevent excess
volatile organic compounds, all violations of the regulations
will be considered serious. The severity of the violation will
be a function of the amount by which the volatility of fuel
(measured in pounds per square inch) exceeds the standard because
the larger the excess over the standard, the greater the
environmental harm. -
B. History of Violations
As provided in the EPA Policy, this policy provides higher
penalties for companies with prior violations of the volatility
regulations. For the purposes of this policy, prior violations
include any previously issued NOV where the case was not dropped,
or any judicial or administrative resolution where there was not
2
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a dismissal or judgment in favor of the defendant. Previous
violations will include any violation of the regulations by a
particular company, regardless of the EPA region in which it
occurred.
C. Business Size of the Violator
Penalties under this policy are generally calculated based
upon the number of gallons of gasoline in violation. As a -
result, a specific adjustment to reflect the size of the
violator’s business is generally not necessary. A penalty which
is exactly proportional to the magnitude of the violation is
appropriate in most cases, and need not be adjusted for the size
of the violator’s business.
In those cases where the penalty is derived from a penalty
table which does not reflect the gallons in violation (normally
for violations found at retail outlets or wholesale purchaser—
consumer facilities), penalties are different for different—sized
businesses. These distinctions are appropriate because the
business size of potential violators may range from very small
businesses to major national corporations, and the appropriate
level of penalty required to achieve deterrence will differ. For
the purposes of this policy, the size of a business entity is
expressed in terms of the violator’s gross income (i.e., total
business revenues from the business entity which gave rise to the
violation) for the prior fiscal year. When the violator is an
individual, size is expressed in terms of the individual’s gross
income from the prior fiscal year. Where the prior fiscal year
is not representative of the violator’s historical business size,
revenues or income from the prior three to five years and/or
recent trends should be evaluated.
D. Penalty Formula -
Penalties are calculated in a manner which removes the
economic benefit the violator may have received from violating
the volatility regulations, and in addition, includes a deterrent
to discourage other violations. This policy assigns the amounts
of economic benefit which are appropriate for different lev 1s of
noncompliance (Table 1). The amounts of these benefits are based
upon analyses for the volatility regulations.
3
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Table 1. Economic benefit resulting from the
production of gasoline which exceeds the
volatility standards.
Amount Standard Assigned Economic Benefit Value
Exceeded (per gallon of noncomplying gasoline)
0.00 to 0.500 psi $.0l
0.501 to 1.000 psi $.02
1.001 to 2.000 psi $.03
over 2.000 psi $.04
The economic benefit component (EBC) of the proposed penalty
is calculated by multiplying the number of gallons of gasoline
which are in violation by the appropriate economic benefit value
from Table 1. The gravity component (GC) is equal to 2.0 times
the economic benefit component. The penalty (P) is equal to the
sum of the economic benefit and the gravity component. Thus, the
proposed penalty is calculated using the following formula:
P = EBC + GC, where GC = 2.0 * EBC
In order to reflect the history of violations, the gravity
component will be increased for cases where the violator has a
history of prior violations. Thus, the formula for calculating
the proposed penalty for a violator who has a history of prior
violations is as follows:
Number of
Prior Violations Formula
1 P = EBC + (GC * 1.5), where GC = 2.0 * EBC
2 P = EBC + (GC * 2.0), where GC = 2.0 * EBC
3 P = EBC + (GC * 3.0), where GC = 2.0 * EBC
1n certain cases, the number of gallons of gasoline in
violation will be so small that the penalty calculated as
described above will not constitute a sufficient deterrent to
achieve the goals of the volatility regulations. For this
reason, minimum proposed penalties are provided in this policy
(see Table 2). The penalties from Table 2 should be used when
the penalty calculated as described above is less than the
penalty derived from Table 2. In other words, the penalty should
be the greater of the calculated penalty and the penalty from
Table 2.
Section 211 d) of the Clean Air Act provides for a penalty
of not more than $25,000 per day of violation and the economic
benefit or savings from the violation. Thus, any penalty
calculated under this policy may not exceed $25,000 per day of
violation plus the economic benefit or savings from the
violation.
4
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Table 2. Minimum penalty amounts for
volatility violations, adjusted for business
size, gravity of.the violation; and the
number of prior violations.
Number of
Prior
Violations
Business Size
I II III
Exceeds the standard by 0 to 0.500 psi
0
$ 2,000
$ 3,000
$ 6,000
1
$ 2,600
$ 3,800
$ 8,000
2
$ 3,500
$ 6,000
$11,000
3
$ 4,000
$ 8,000
$14,000
Exceeds the standar
d by 0.501 to 1.000
0
$ 3,000
$ 4,500
$ 9,000
1
$ 4,000
$ 6,000
$10,000
2
$ 5,000
$ 8,000
$12,000
3
$ 6,000
$11,000
$16,000
Exceeds the standard by 1.001 to 2.000
0
$ 4,000
$ 6,000
$12,000
1
$ 6,000
$ 8,000
$14,000
2
$ 8,000
$12,000
$17,000
3
$12,000
$15,000
$20,000
Exceeds the standard
by more than
2.000
0
$ 6,000
$ 9,000
$16,000
1
$ 8,000
$12,000
$18,000
2
$13,000
$16,000
$-2 7 ?
3
$17,000
$18,500
ç$20,000)
Size of business categories as defined for this policy are:
Size I — $0 to $1,000,000
Size II — $1,000,000 to $10,000,000
Size III — $10,000,000 and greater.
5
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TAMPERING AND DEFEAT DEVICE CIVIL PENALTY POLICY
FOR ADMINISTRATIVE HEARINGS
I. INTR0DU TION
This section describes the FOSD policy for determining
penalties for violations of the anti-tampering and defeat device
provisions of the Clean Air Act as amended in 1990. The
tampering and the defeat device prohibitions are specified under
section 203(a) (3) of the Act, 42 U.S.C. § 7522(a)(3). Section
203(a) provides that the following act and the causing thereof
are prohibited:
(3) (a) - for any person to remove or render inoperative
any device or element of design installed on or in a
motor vehicle or motor vehicle engine in compliance
with regulations...prior to its sale and delivery to
the ultimate purchaser, or for any such person
knowingly to remove orrender inoperative any such
device or element of design after such sale and
delivery to the ultimate purchaser.
(3) (B) — for any person to manufacture or sell, or
offer to sell, or install, any part of component
intended for use with, or as a part of, any motor
vehicle or motor vehicle engine, where a principal
effect of the part of component is to bypass, defeat,
or render inoperative any device or element of design
installed on or in a motor vehicle or motor vehicle
engine in. compliance with regulations. .., and where the
person knows or should know that such part or component
is being offered for sale or installed for such use or
put to such use. - -
A. Statutory Penalties
Tampering — Under section 205 of the Act, any manufacturer
or dealer who violates the tampering prohibition, (3) (A), is
subject to a civil penalty of not more than $25,000 per
violation. Any person other thana manufacturer or dealer who
violates the tampering prohibition is subject to a civil penalty
of not more than $2,500 per violation. Any such violation with
respect to the tampering prohibition constitutes a separate
offense with respect to each motor vehicle or motor vehicle
engine.
Defeat Device — Under section 205 of the Act, any person who
violates the defeat device prohibition, (3) (B , is subject to a
maximum civil penalty of $2,500 per violation. Any such
6
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violation with respect to the defeat device prohibition
constitutes a separate offense with respect to each part or
component.
II • CALCULATING THE PROPOSED PENALTY
The proposed penalty for tampering and defeat device
violations is based upon the gravity of the violation, the
violator’s history of noncompliance, and the size of the
violator’s business.
A. Gravity of the Violation
The primary concern in determining the gravity of the
tampering violation or defeat device violation is the likely
increase in vehicle emissions which may result from the
violation. Acts of tampering with, or defeat devices which
render inoperative, primary emission control systems or specified
major emission control components are presumed to result in the
largest increases in emissions. Therefore, under this policy,
the greatest gravity (and the largest penalties) are assigned to
acts of tampering or defeat devices which involve primary or
specified major emission control parts. A lesser gravity (and
smaller penalties) are assigned to acts of tampering or defeat
devices which involve emission related parts which are presumed
to cause smaller increases in emissions. -
This policy also presumes that certain acts of tampering or
defeat devices may operate to cause a cumulative increase in
vehicle emissions. Violations involving multiple emission
control parts are presumed to cause a larger increase in vehicle
emissions than violations involving only one emission control
part. Additionally, violations involving onboard emissions
diagnostic systems (“OBD—systems”) are presumed to cause a larger
increase in vehicle emissions because the disabling of the OBD—
systems permits a failure in the vehicle’s emission control
equipment or system to go undetected and urirepaired. Any
excessive vehicular emissions due to such failure may persist
over a longer period of time. Therefore, under this policy, the
greatest gravity (and the largest penalties) is also assigned to
acts of tampering or defeat devices which render inoperative
multiple emission control parts or the OBD-system.
The following systems or parts are installed primarily for
emission control or emission control diagnostic, and tampering
with them will likely cause a large increase in emissions.
Therefore, tampering with or manufacturing or selling devices
which bypass or defeat these systems or parts is considered a
level “A” violation.
7
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Exhaust Gas Conversion: catalytic Converter, Oxygen
Sensor
Secondary Air Injection: Air Pump, Diverter Valve,
Pulse Air Valve
Evaporative system: Evaporative canister, Purge Valve
Exhaust Gas EGR Valve, EGR Transducers,
Recirculation System: EGR Vacuum Lines
Onboard Emissions Emission Control Diagnostics
Diagnostic Systems:
Fuel Metering System: Electronic Control Module, Fuel
Injectors
Tampering or defeat devices which result in only partial
deactivation of the above systems or parts, tampering which
involves any other system or part not listed above, or tampering
which involves the replacement of existing exhaust system
components where the converter had been removed previously are -
all considered level violations.
Partial deactivation of certain emission controls, such as
replacing a 3—way converter with a 2—way converter, will cause
the vehicle to pollute significantly less than the total
deactivation of the catalytic converter. Similarly, replacing a
rusted out single or’ dual exhaust system on a vehicle with the
converter already removed will have a minimal adverse effect on
emissions, however, it is still a violation under current EPA
policy. The above actions would, therefore, more appropriately
be level “B” violations based on their lesser emissions impacts
while the act of removing or totally deactivating a catalytic
converter would be a level “A”.
B. History of Prior Violations
As provided in the EPA policy, this policy also provides
higher penalties for a party with a history of noncompliance with
the tampering or defeat device provisions.
Where a party has previously violated the tampering or
defeat device provisions, this is usually clear evidence that the
party was not deterred by the Agency’s enforcement action.
Therefore, the penalty shall be increased, unless the previous
violation was caused by factors entirely out of the control of
the violator. For the purposes of this policy, prior violations
include any NOV resolved where the cases was not dropped, or any
judicial or administrative resolution where there was not a
8
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dismissal or judgement in favor of the defendant. Where a party
operates multiple facilities, it may be difficult to determine
whether a previous instance of noncompliance should trigger an
increased penalty. In making this determination, FOSD shall
consider who in the organization had control or oversight
responsibility for the conduct resulting in the violation. 1n
situations where the same person(s) or organizational unit had or
reasonably should have had control or oversight responsibility
for the violative conduct, the violation should be considered
part of the compliance history of that regulated party. FOSD
shall also consider whether a party changes operators or shifts
responsibility for compliance to different groups as a way of
avoiding penalties, and whether there is a consistent pattern of
noncompliance or a corporate—wide indifference to environmental
protection. In such instances, where there is a shifting of
responsibility to avoid liability or a pervasive indifference to
the tampering or defeat device prohibitions, the violation should
be considered part of the compliance history of that regulated
party.
C. Business Size of the Violator
To create a fair and equitable deterrent, the business size
or operating budget of the violator must be considered. Where
the violator is a business entity (sole proprietor or
corporation), size is expressed in terms of the violator’s annual
gross income (i.e., the total business revenues from the business
entity which gave rise to the violation). A three million dollar
per year annual gross income has been chosen for the line of
demarcation between business sizes. Where the prior fiscal year
is not representative of the violator’s business size, revenues
or income from the prior three to five years should be evaluated.
Where the violator is a municipal violator, size is expressed in
terms of the violator’s operating budget. Municipalities, unlike
corporations, derive their income from public revenues. In
addition, only the very smallest municipalities are likely to
have an operating budget below three million dollars ($3M).
Therefore, in distinguishing the size of municipalities, only
those municipal violators with an annual operating budget of at
least ten million dollars ($1OM) are subject to the larger
penalties.
D. Penalty Calculations
Penalties are calculated in a manner which removes the
economic benefit the violator may have received from violating
the regulations, and in addition, includes a deterrent to
discourage other violations. The tables below reflect the
gravity of the violation, the history of prior violations and the
business size of the violator. However, where the use of the
table would formulate a penalty which would not reflect the
violator’s economic benefit, an amendment to the use of the table
9
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must be followed. The lowest penalty amount selected from the
table that is being used to calculate the total penalty cannot be
less than twice the violator’s economic benefit realized for that
violation.
DEFEAT DEVICE AND TAMPERING PENALTY TABLE
FOR ADMINISTRATIVE HEARINGS
FOR ALL VIOLATORS
OTHER THAN DEALER OR MANUFACTURER VIOLATIONS OF (3) (A)
(Penalty is per violation)
NUMBER OF
VIOLATIONS
VIOLATION
LEVEL
PRIOR
VIOLATIONS
SIZE OF BUSINESS
[ MUNICIPAL OPERATING BUDGET]
Under $314
[ Under $1014]
$3M or
[ $lOM or
over
over]
1ST 25
A
1 or more
$2,000
$2,500
0
$1,900
$2,400
-
B
1
or more
$1,800
$2,300
0
$1,500
$2,000
EXT 50
A
1 or more
$1,500
$2,300
0
$1,000
$2,000
B
1 or more
$1,000
$2,000
0
$ 700
$1,500
REMAINDER
A
1 or more
$ 400
$ 600
0
$200
$400
B
1
or more
$ 200
$ 400
0
$ 100
$ 300
10
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SECTION (3) (A) MANUFACTURER AND DEALER
TANPERING PENALTY TABLE
(Penalty is per violation)
NUMBER OF
VIOLATIONS
VIOLATION
LEVEL
PRIOR
VIOLATIONS
SIZE OF BUSINESS
Under $5M
$5M or over
1ST 25
A
1 or
more
$25,000
$25,000
0
$10,000
$20,000
B
1 or
more
$20,000
$25,000
0
$ 5,000
$10,000
NEXT 50
A
1 or
more
$ 6,000
$ 8,000
0
$ 3,000
$ 4,000
B
1 or
more
$ 4,000
$ 5,000
0
$ 2,000
$ 3,000
tEMAINDER
A
1 or
more
$ 2,000
$ 4,000
0
$ 1,000
$ 2,000
B
1 or
0
more
$ 1,000
$ 700
$ 2,500
$ 1,500
.
In some instances, a violator may have violated both the tampering and
the defeat devices prohibition. Where the separate violation is an
integral part of the other violations, EPA shall exercise its enforcement
discretion in determining whether to merge the violations or assess a
penalty for both violations.
11
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D. Penalties for Record-keeping and Retention Violations
of EPA’s Aftermarket Catalytic Converter Policy
EPA’s enforcement policy of August 6, 1986 (“Policy”)
regarding the sale and use of aftermarket catalytic converters
requires proper record-keeping and retention as a. condition to
the installation of aftermarket catalytic converters. Therefore,
if a shop installs aftermarket catalytic converters, it is
required to have proper documentation reflecting installation of
such converters. The lack of such accompanying documentation
will result ih a violation since it is required that a new OEM
catalytic converter be installed unless all requirements of the
aftermarket catalytic policy are satisfied.
Nature of Violations -
The types of potential record—keeping violations are as
follows:
1. Invoice does not include each of the following:
customer’s name and complete address; vehicle’s make,
model year and mileage; and reason for replacement.
2. The repair facility does not have a signed statement by
the vehicle owner and installer, or state/local program
representative concerning the reason for the
replacement of the catalytic converter.
3. Copies of invoices are not retained for six months.
4. The removed converter is not retained for 15 working
days. -
5. The removed converter is not properly marked to
identify the vehicle from which it was removed.
6. Required warranty card is not filled out by installer
and given to the customer (for new aftermarket
converters only).
In order to compute the penalty for record—keeping and
retention violations, it is necessary to determine the number of
aftermarket converters that were installed that did not have
accompanying proper documentation and/or were not retained as
required over the previous six month period. The following data
can be used to help ascertain the number of installations
involved: invoices reflecting converter replacement, information
supplied by an afterinarket converter supplier as to the number of
converters provided to the shop, statement(s) from employee(s) or
past employee(s) as to the number of converters installed,
converters found at the shop unmarked, etc.
12
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Penalty Determination
This Policy bases penalty amounts on the number of
violations, gravity of the violations, size of the business, and
history of prior violations.
Violations of this type are divided into two levels:
Level 1: The records are so deficient that it cannot be
determined with certainty either from the service invoice or by
further investigation which installations were misapplications
over the previous six month period as a result of deficiencies in
certain significant requirements (e.g., owner’s name and complete
address; vehicle’s make, model year and mileage; reason for
replacement; and the warranty card completed accurately). These
include the deficiencies listed in items 1, 3, and 6 above.
Every record reflecting such converter work and/or every
improperly labeled converter is considered a violation for
purposes of the proposed penalty computation.
Level 2: The records reflect proper applications (i.e.,
the proper catalyst types - two-way, three-way or three—way with
air — were installed). However, there is insufficient supporting
data as required in the Policy, to demonstrate the converter was
removed under appropriate circumstances. These include the
deficiencies listed in items 2, 4, or 5 above. Every improper
record—keeping violation which is documented as having occurred
during the previous six months is considered a violation for
purposes of the proposed penalty computation.
RECORDKEEPING AND RETENTION PENALTY TABLE
VIOLATION LEVEL
PRIOR VIOLATIONS
SIZE OF BUSINESS
Under $ 3M
$3M or over
1
1 or more
$ 800
$1,000
0
$600
$ 800
2
1 or more
$ 400
$ 600
0
$200
$ 400
The proposed penalty amount should be determined by
multiplying the number of violations by the appropriate figure
from the above table. The proposed penalty can be a combination
of Level 1. and Level 2 violations. Penalties for new car dealers
are determined by multiplying the above calculated figure by two.
13
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The scenario may exist where shop records indicate the
purchase of aftermarket catalytic converters and/or statements
from shop employees confirm the installation of such converters,
but few or none of the specific installation records exist. In
this situation it is impossible to determine that the
installations were performed properly, since records do not exist
of the installations. Therefore, the installation of aftermarket
catalytic converters in this situation are essentially level 1
violations. The inspector should document through shop records
and/or statements by the shop owner or employees that multiple
(more than one afterinarket catalytic converter installations have
been performed by the shop.
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UNLEADED GASOLINE CIVIL PENALTY POLICY
POR ADMINISTRATIVE EEARINGS
I. INTRODUCTION
This section describes the FOSD policy for d terminiflg
penalties for violations of the unleaded gasoline regulations.
Pursuant to Section 211 of the Act, 40 CFR Part 80 was
promulgated to regulate and control the manufacture, introduction
into commerce, offering for sale, and sale of motor vehicle
fuels, most specifically leaded and unleaded gasoline. See 40
CFR sections 80.21, 80.22 and 80.23 and Appendices A, B, and C.
Violations of the Unleaded Gasoline Regulations fall into two
office—generated categories :“major” violations and “minor”
violations. Major violations include introduction (misfueling)
violations, contamination violations, and nozzle violations.
Minor violations include not offering unleaded gasoline
violations, unleaded nozzle violations, label violations, and
sign violations. Under the unleaded gasoline regulations,
gasoline retailers, distributors or resellers, refiners and
wholesale purchases-consumers are subject to the regulations.
A. Major Violations
1. Introduction of Leaded Gasoline into Unleaded Vehicles
Under Section 80.22(a), gasoline retailers and
wholesale purchaser-consumers are prohibited from
introducing or causing or allowing the introduction of
leaded gasoline into motor vehicles requiring unleaded
gasoline only. /
2. Contaminations of Unleaded Gasoline
Under Section 80.21(a) and’(b), 80.22, and 80.23(a),
refiners, reseller, distributors, carriers, retailers,
an wholesale purchaser—consumers are in the chain of
distribution of gasoline and are prohibited from
dispensing, offering for sale, selling, storing,
transferring or causing the transportation to other
parties, gasoline represented to be unleaded, but which
does not conform to the requirement prescribed in the
regulations (maximum of .05 grams of lead per gallon
and a maximum of .005 gram of phosphorous per gallon).
3. Nozzle Violations
Under Section 80.22(f) (1) gasoline retailers and
wholesale purchaser-consumers are required to equip their
leaded gasoline pumps with nozzle spouts having an outside
15
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diameter of not less than 0.930 inch. This is to ensure
that leaded gasoline cannot be introduced into vehicles
designed for unleaded fuel only (these vehicles are equipped
with a smaller diameter fuel inlet restrictor).
B. Minor Violations
Under Section 80.22, gasoline retailers and wholesale
purchaser—consumers are required to offer for sale at least one
grade of unleaded gasoline I § 80.22(b)), equip unleaded gasoline
pumps with the proper nozzles [ § 80.22(f) (2)), properly label
gasoline pumps [ § 80.22(e)), and post the required federal
warning sign at ,a retail outlet or wholesale purchaser-consumer
facility [ § 80.22(d)].
C. Statutory Penalty
Under Section 211(d) of the Act, a violator of any of th.e
above fuels requirement is subject to a civil penalty of not more
than $25,000 far every day of such violation and the economic
benefit or savings resulting from the violation.
I I. CALCULATING ThE PENALTY
The penalty for unleaded gasoline violations is calculated
by adding the economic benefit to the violator as a result of the
non-compliance, plus the gravity component for the violation (the
dollar, amount set by the Agency for deterrence). As discussed
below, the economic benefit in the unleaded gasoline violations
is often virtually non-existent. Therefore, the penalty is
derived from a table which takes in to account the severity of
the violation, the history of prior violations, and the
violator’s business size.
A. Economic Benefit
The economic benefit involved in unleaded gasoline
violations is normally non-existent, de minimis, or incalculable.
A nozzle violation without any related introduction violation
does not, by itself, result in any economic gain; the same goes
for label and sign violations. Introduction violations do not
usually create an economic benefit because leaded gasoline is
usually about the same price as unleaded regular. Benefit from a
contamination violation could sometimes be quantified by the
number of gallons sold at the higher unleaded price (although in
many instances, leaded gasoline now has a higher price), but the
requisite information to determine the amount of profit is not
usually available. In addition, the price differential between
leaded and unleaded has disappeared in the last few years. In
many instances, the leaded gasoline has a higher cost.
Therefore, the economic benefit is deemed to be zero.
16
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B. Gravity of the Violation
FOSD has chosen a penalty table to affectively encompass the
wide range in gravity of the unleaded fuels violations. This
table lays out either a figure for each schedule; the schedules
are arranged by type of violation (most significant to least
significant). The schedule also reflects the decreasing penalty
amounts for these violations.
C. History of Prior Violations
As provided in the EPA Policy, this policy provides higher
penalties for companies with a history of prior violations of the
unleaded gasoline regulations. For the purposes of this policy,
prior violations include any NOV resolved where the case was not
dropped, or any judicial or administrative resolution where there
was not a dismissal or judgment in favor of the defendant. Prior
violations will include previous occurrences of the same type of
violations occurring in the same EPA region by a particular
company.
D. Business Size of the Violator
Penalties set forth in the table are also distinguished
based on the size of the violator’s business. These distinctions
are appropriate because the business size of potential violators
may range from very small businesses to major national
corporations, and the appropriate level of deterrence will
differ. For the purposes of this policy, the size of a business
entity is expressed in terms of the violator’s gross income
(i.e., total business revenues from the business entity which
gave rise to the violation) for the prior fiscal year. When the
violator is an individual, size is expressed in terms of the
individual’s gross income from the prior fiscal year. Where the
prior fiscal year is not representative of the violator’s
historical business size, revenues or income from the prior three
to five years should be evaluated.
Category I — $0 to $250,000
Category II — $250,000 to $1,000,000
Category III — $1,000,000 to $5,000,000
Category IV — over $5,000,000
17
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UNLEADED GASOLINE VIOLATIONS PENALTY TABLE
SCHEDULE
NO.
NUMBER OF
PREVIOUS
VIOLATIONS
SIZE OF BUSINESS
I
II,
III
IV
1
3 or more
$14,000
$20,000
$20,000
$20,000
2
$ 8,000
$12,000
$16,000
$18,000-
1
$ 4,000
$ 8,000
$14,000
$16,000
0
$ 2,000
$ 4,000
$12,000
$14,000
2
3 or more
$14,000
$20,000
$20,000
$20,000
2
$ 8,000
$12,000
$16,000
$18,000
1
$ 4,000
$ 8,000
$14,000
$16,000
0
$ 2,000
$ 6,000
$12,000
$14,000
3 or more
$12,000
$16,000
$20,000
$20,000
2
$ 6,000
$10,000
$14,000
$16,000
1
$ 3,000
$ 6,000
$12,000
$14,000
0
$ 1,600
$ 3,000
$10,000
$12,000
3 or more
$10,000
$14,000
$18,000
$18,000
2
$ 4,000
$ 6,000
$12,000
$14,000
1
$ 2,000
$ 4,000
$ 8,000
$10,000
0
$ 1,000
$ 2,000
$ 4,000
$ 6,000
3 or more
$ 3,000
$ 4,000
$ 5,000
$ 6,000
2
$ 2,300
$ 3,000
$ 4,000
$ 5,000
1
$ 1,600
$ 2,200
$ 3,000
$ 4,000
0
$ 1,000
$ 1,600
$ 2,000
$ 3,000
6
3 or more
$ 2,800
$ 3,200
$ 3,600
$ 4,000
2
$ 2,100
$ 2,500
$ 2,900
$ 3,300
1
$ 1,400
$ 1,800
$ 2,200
$ 2,600
0
$ 900
$ 1,200
$ 1,600
$ 1,900
3 or more
$ 1,400
$ 1,600
$ 1,800
$ 2,000
2
$ 1,200
$ 1,400
$ 1,600
$ 1,800
1
$ 1,000
$ 1,200
$ 1,400
$ 1,600
0
$ 800
$ 1,000
$ 1,200
$ 1,400
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SCHEDULE
NO.
SECTION
REFERENCE
/ DESCRIPTION
i
80.22(a),
80.23(e) (1)
Introduction of leaded gasoline
from a leaded pump .into a -
vehicle requiring unleaded
gasoline.
2
.
.
80.22(a),
80.23(a), (b),
(C), and (d)
Dispensing or offering for sale
gasoline represented to be
unleaded which does not conform
to the lead or phosphorus
standard (contamination).
2
80.22(f) (1)
Failure to equip leaded gasoline
pumps with proper nozzles.
3
80.21(a) and
(b)

Sale or transfer of leaded
gasoline represented to be
unleaded to a distributor or
retailer/wholesale purchaser—
consumer.
Causing unleaded gasoline to
exceed the leaded or phosphorus
standard upon delivery
(carrier).
4
80.22(b)
Failure to offer for sale a
grade of unleaded gasoline.
5
80.22(f) (2)

Failure to equip unleaded
gasoline pumps with proper
nozzles.
6
80.22(e)
Failure to properly label
gasoline pumps. -
7
80.22(d)
Failure to post the required
sign at a retail outlet or
wholesale purchaser—consumer
facility.
SECTION 211(f) PENALTY POLICY
FOR ADMINISTRATIVE HEARINGS
Penalty amounts for section 211(f) violations will be
derived from the Unleaded Gasoline Penalty Table. These
violations will be considered to be a Schedule 2 violation.
Section 211(f) violations will follow the same policy for the
business size and history of violations as the Unleaded Gasoline
Penalty Policy.
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_________ PENPLTY POLICY
FOR IDMINISTRATIVE RE RING8
I. INTRODUCTION
This section describes the FOSD policy for determining
penalties for violations of the lead usage and reporting
regulations. The lead usage penalty policy is designed to
recover the violator’s actual economic benefit. The penalty is
computed by adding the economic benefit component plus a gravity
component. The gravity component will be three times the
economic benefit component.
A. Penalty for False Lead Usage
On July 11, 1986 (51FR25253), EPA amended the penalty policy
concerning violations of 40 CFR 80.20 to establish a lead
valuation of $0.05 per gram for use in the calculations of the
penalties for violations which occurred after the end of 1985.
After an analysis of historical lead values, EPA has decided that
it is appropriate to use $0.05 per gram for any violations of the
lead usage regulations. Even if the $0.05 per gram is not
entirely correct all the time, EPA feels that the penalty
calculations are appropriate due to the severe detrimental
effects of lead on humans and the environment.
First Violation EC + GC = Penalty, where GC = 3 * EC
One Prior Violation EC + GC * 1.5 = Penalty, where GC = 3 * EC
Two Prior Violations EC + GC * 2 = Penalty, where GC = 3 * EC
Three or more
Prior Violations EC + GC * 3 = Penalty, where GC = 3 * EC
B. Lead Reporting Violations
The lead phasédown regulations require a regulated party to
submit quarterly reports on lead usage. A penalty of $10,000
will be levied for each quarterly report that does not accurately
reflect the lead usage during that quarter or for failure to
submit a report.
Penalty = $10,000 * A, where A = the number of
reporting violations
Although the $10,000 per reporting violation will generally
be used for purposes of this policy, where deterrence or other
factors requirea higher penalty, the Agency reserves the right
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to subsequently apply the maximum $25,000 per day civil penalty
applicable to each and every day that a reporting violation
exists. The date on which the incorrect report is submitted (or
the date on which a report that was not submitted was due)
constitutes the first day of the violation. Each day after that
constitutes an additional violation subject to a maximum civil
penalty of $25,000 per day until the corrective report is filed
with the Agency.
ADJUSTI(ENT P 4 PTER INITIATION OP LITIGATION
Subsequent to the issuance of an administrative complaint,
the opportunity remains for the parties to agree on a settlement
anytime before the trial begins. Normally the minimum acceptable
settlement amount after the issuance of a complaint will be no
lower than the penalty set forth in the Notice of Violation.
However, as set forth below, balancing other factors could raise
or lower the bottom—line settlement amount to an amount different
from the NOV amount. This smaller degree of mitigation after the
filing of the complaint reflects the Agency’s desire to have the
defendant remedy the violation(s) and come into compliance as
expeditiously as possible. By decreasing the mitigation as the-
time between issuance of the Notice of Violation and settlement
increases, the Agency will begin to get defendants to agree to
swift resolution of environmental problems, one of the stated
goals of the general penalty policy.
The amount of the mitigation allowed after issuance of an
administrative complaint is determined through balancing several
factors applicable to the particular case. Some of these factors
are: willfulness, the strength of the evidence and the overall
probability of winning the case, the relative severity of the
violations, possible financial hardship to the defendant, the
amount of government resources it will take to present the
Agency’s strongest possible case, the amount of the NOV penalty
and such other matters as justice may require. Balancing these
factors, the attorney makes a subjective determination as to the
relative “worth” of the case and assigns to it the appropriate
“bottom-line” post-complaint settlement figure. If the defendant
does not agree to settle for an amount equal to or greater than
this “bottom—line” figure, the case will proceed to trial.
In suitable circumstances, appropriate Supplemental
Environmental Projects may be utilized for settlement purposes
after the issuance of the administrative complaint. However, at
this point in the process, it will be necessary to obtain the
approval of the Presiding Officer.
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