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X PRO^°
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Evaluation Briefing Report
Assessment of EPA's Projected
Pollutant Reductions Resulting from
Enforcement Actions and Settlements
Report No. 2007-B-00002
July 24, 2007

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Report Contributors:
Rick Beusse
Ira Brass
Hilda Canes Garduno
Bao Chuong
Dan Engelberg
James Hatfield
Tim Roach
Michael Wagg
Abbreviations
CAA
Clean Air Act
CCDS
Case Conclusion Data Sheet
CEMS
Continuous Emission Monitoring System
CWA
Clean Water Act
EPA
U.S. Environmental Protection Agency
FY
Fiscal Year
ICIS
Integrated Compliance Information System
lbs.
Pounds
OECA
Office of Enforcement and Compliance Assurance
OIG
Office of Inspector General
Cover photos: Images of water pollution (top) and air pollution (bottom)
(photos courtesy Iowa Department of Natural Resources
and U.S. EPA, respectively).

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^tD sr^
*. U.S. Environmental Protection Agency	2007-B-00002
? KM T> Office of Inspector General	July 24,2007

At a Glance
Catalyst for Improving the Environment
Why We Did This Review
We conducted this review at
the request of the Office of
Management and Budget. We
were asked to assess (1) the
accuracy and reliability of the
U.S. Environmental Protection
Agency's (EPA's) Office of
Enforcement and Compliance
Assurance (OECA) pollution
reduction projections for
enforcement actions and
settlements, and (2) whether the
reported projected pollution
reductions were achieved.
Background
OECA's enforcement actions
can result in facilities agreeing
to install pollution controls or
take other measures to reduce
pollutant emissions or
discharges. In accordance with
the Government Performance
and Results Act, OECA
annually reports on the amount
of pollutants expected to be
reduced, treated, or eliminated
as a result of these actions.
OECA only reports 1 year's
worth of estimated pollutant
reductions, though reductions
may occur for years into the
future. The reductions are
reported in the fiscal year that
an enforcement case is
concluded, not necessarily the
year in which the projected
reductions will be fully
realized.
For further information, contact
our Office of Congressional and
Public Liaison at (202) 566-2391.
To view the full report,
click on the following link:
www.epa.gov/oiq/reports/2007/
20070724-2007-B-00002.pdf
Assessment of EPA's Projected Pollutant Reductions
Resulting from Enforcement Actions and Settlements
What We Learned
The accuracy and reliability of EPA's projected pollutant reductions for Fiscal
Years 2003-2006 were dependent on the specific program in which the
enforcement action took place. For example, more reliable data were available to
project reductions from oil spill and power plant cases than other Clean Water Act
(CWA) and Clean Air Act (CAA) cases, respectively. EPA has improved its
internal control process for ensuring more accurate pollutant reduction estimates
from concluded enforcement cases. The accuracy of estimated reductions from
CWA enforcement actions has likely improved as a result of these internal control
changes. However, we noted some inconsistencies in the calculation of projected
CAA emission reductions. For example, three of the six power plant cases we
reviewed did not include estimates for particulate matter reductions, thereby
underreporting reductions. Also, different methodologies were used to estimate
post-compliance emissions from power plant cases. Further, three of the six
regions we surveyed did not independently review the basis for the projected
reductions for some CAA cases as called for by OECA's guidance.
EPA's annual projected reductions were heavily influenced by a few large cases.
Less than 1 percent of the CWA cases accounted for 52 percent of the projected
pollutant reductions from concluded CWA enforcement actions. Similarly, a few
large power plant cases resulted in a marked increase in total estimated CAA-
related reductions for Fiscal Years 2004-2005. For example, two power plant
cases accounted for over 600 million pounds in reductions, about 78 percent of
the Fiscal Year 2004 total.
Facilities were on target to meet the projected reductions for the CAA cases we
reviewed. However, it will take years to complete all corrective actions in these
cases. Consequently, we could not determine whether they had achieved their
total projected reductions. Projected reductions have already been achieved for at
least one CWA case, and other CWA cases were making progress toward meeting
their projected reductions. EPA's 2006 Annual Report used terms such as
"achieved," "reduced," and "actual" to describe emission reductions for that year
even though the reductions were often only projected amounts, since it can take
years for reductions to occur. OECA agreed to use more precise wording in
future reports.
We presented the results of our review to OECA on May 23, 2007. We clarified
parts of our presentation based on OECA's feedback. OECA generally agreed
with our findings and stated that it would address the issues disclosed. We make
no recommendations in this report.

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.s^DSr%
I 	\ \	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
|	S	WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
MEMORANDUM
July 24, 2007
SUBJECT:
FROM:
Assessment of EPA's Projected Pollutant Reductions
Resulting from Enforcement Actions and Settlements
Report No. 2007-B-00002
Wade T. Najjum	'
Assistant Inspector General for-Program Evaluation
TO:
Granta Y. Nakayama
Assistant Administrator for Enforcement and Compliance Assurance
This is our briefing report on the accuracy of pollution reduction projections resulting from
Office of Enforcement and Compliance Assurance enforcement actions and settlements,
conducted by the Office of Inspector General (OIG) of the U.S. Environmental Protection
Agency (EPA). This briefing represents the opinion of the OIG and does not necessarily
represent the final EPA position. Final determinations on matters in this briefing will be made by
EPA managers in accordance with established resolution procedures.
The estimated cost of this project - calculated by multiplying the project's staff days by the
applicable daily full cost billing rates in effect at the time - is $397,274.
Action Required
Since this briefing report contains no recommendations, you are not required to respond to it.
We have no objections to the further release of this briefing report to the public. This report will
be available at http://www.epa.gov/oig.
If you or your staff have any questions regarding this briefing report, please contact Rick Beusse,
Director for Program Evaluation, Air Issues, at (919) 541-5747 or beusse.rick@epa.gov; or
Dan Engelberg, Director for Program Evaluation, Water Issues, at (202) 566-0830 or
engelberg, dan@,epa. gov.

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cc: Office of the Administrator
Assistant Administrator for Air and Radiation
Assistant Administrator for Water
Agency Followup Official (CFO)
Agency Followup Coordinator
Office of General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Audit Liaison, Office of Enforcement and Compliance Assurance
Acting Inspector General

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OIG Assessment of EPA's
Projected Pollutant Reductions

Briefing for OECA

Originally Presented on

May 23, 2007


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Objectives
• How accurate and reliable are OECA's
pollutant reduction projections for
enforcement actions and settlements?
• Were the projected pollutant reductions
reported for selected enforcement actions
and settlements actually achieved?
2

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What We Learned
The reliability of estimated pollutant
reductions is dependent on the specific
program in which the enforcement action
takes place.
•	Projected pollutant reductions from Oil Pollution Act cases
tend to be more reliable than those associated with other
types of CWA enforcement actions.
•	Projected pollutant reductions for power plant cases are
based on more reliable methods [i.e., Continuous Emission
Monitoring System (CEMS)] than projections for other CAA
cases.

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What We Learned
There have been improvements in the
internal control process EPA uses to generate
pollutant reduction estimates.
•	OECA issued new guidance in August 2004.
•	Standard calculation methodologies have been expanded to
cover more types of enforcement actions.

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What We Learned
Projected pollutant reductions have been or
are being achieved in most of the cases
reviewed. However, because of the length of
time needed for required corrective actions, it
is not possible to make a determination in all
cases.
5

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What We Learned
The settlement of a few large power plant
cases resulted in a marked increase in total
estimated reductions for Fiscal Years (FYs)
2004 - 2005. For example:
•	2 power plant cases in FY 2004 account for over 600 million
lbs. in reductions - approximately 60% of the FY 2004 total.
•	2 other power plant cases in FY 2005 account for over
535 million lbs. in reductions - almost 50% of the FY 2005
total.
6

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What We Learned
•	EPA's FY 2006 Performance and
Accountability Report uses terms such as
"achieved," "reduced," and "actual" in
describing pollutant reductions (pp. 9, 118).
•	These descriptions should be revised to
reflect that results are based on estimated
projections of future pollutant reductions and
are not actual reductions.

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What We
Learned
Excerpt from
EPA'S FY 2006
Performance and
Accountability
Report
egregious violations and return
violators to compliance as quickly
as possible, greatly reducing
impacts on sensitive populations.
To increase compliance and
improve EMPs, EPA encourages
facilities to identify, disclose,
and correct violations through
incentives such as reduced or
eliminated penalties.
through a tew key performance
accomplishments. EPA has
reduced, treated, or eliminated
890 million pounds of pollution
through enforcement actions in
FY 2006. That represents an
increase of 97.78 percent over the
performance target of 450 million
pounds. EPA significantly exceeded
the FY 2006 performance target of
Millions of Pounds of Pollutants Reduced
Through Enforcement Actions
Planned
Actual
2000
2001
2002
2003 2004
FiscalYear
2005
2006

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r
Background
Estimated Pollutant Reductions by Environmental Media
FYs 2003 - 2006
2%
34%/ I	\
/64%
~	Air
¦ Water
~	Other

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Background
Overall Reported Pollutant Reductions
FYs 2003 - 2006
s
I £
*	s
I £
*	£
1200
1000
800
600
400
200
0
2003
2004	2005
Fiscal Year
2006

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Background
•	Regions record enforcement case
information - including estimated pollutant
reductions - on the Case Conclusion Data
Sheet (CCDS).
•	CCDS information is entered into the
Integrated Compliance Information System
(ICIS).

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Background
•	OECA contractor to develop a methodology
for verifying projected pollutant reductions.
•	OECA contractor to pilot test methodology on
petroleum refinery cases.
•	Completion date is September 30, 2007.
12

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Clean Water Act Enforcement
Summary Information

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Projected CWA Pollutant
Reductions FYs 2003 - 2006
22% - OIG Sample
78%
Total CWA Projected Pollutant Reductions -1.2 billion lbs.
Total OIG Sample-271 million lbs.

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CWA Review Methodology
•	Selected eight cases for review.
•	Evaluated processes used to calculate
pollutant reductions against existing Agency
guidance.
•	Determined how Agency tracks compliance
with the enforcement order.
•	Determined, if possible, whether projected
reductions were occurring.

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CWA Cases Reviewed
Case
EPA
Date Final Order
CWA Section

Region
Entered

Cooper Land Development, Inc.
7
2/17/2006
301/402
Midwest Feeding Company
7
11/7/2003
301/402
Joe Ivie Hog Farm
6
3/25/2003
301/402
Explorer Pipeline
6
10/8/2004
311 (b)
Galveston, City of
6
12/10/1996
301
H & W Petroleum Company, Inc.
6
6/2/2006
311©
South Star Oil & Gas
6
5/20/2005
301
Wal-Mart
HQ
9/22/2005
301/402
Total Projected Reductions = 270,874,329 lbs.

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Most Projected Pollutant Reductions from
CWA Enforcement Actions are Modest
(1,000 -100,000 pounds)
Frequency of Pollutant Reductions
(FYs 2003 - 2006) -c WA = 2,632
(j,	1,600 -i			n-
$	1,200 -
? 800 -
i 400 -		
Pollutants Reduced (lbs.)

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Projected Pollutant Reductions are
Concentrated in a Small Number of
CWA Enforcement Actions
Just 23 of 2,632 cases accounted for
52 percent of the projected pollutant
reductions from concluded CWA
enforcement actions.

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Conclusions - CWA
The accuracy and reliability of pollutant
reduction estimates vary based on the
information available to enforcement staff.
•	Estimates for oil spill removals, for example, are more
accurate because better monitoring data are available.
•	Enforcement actions requiring volumetric estimates
(e.g., holding ponds) may be less accurate.
19

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Conclusions - CWA
The accuracy and reliability of pollutant
reduction estimates have likely improved
as a result of changes to EPA's quality
assurance process.
•	Updated OECA guidance (2004) encouraged greater
standardization of pollutant reduction calculations.
•	Reported pollutant reduction estimates are receiving
increasing levels of scrutiny.

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Conclusions - CWA
•	Where corrective action has been completed,
field inspections have been used to verify
that pollutant reductions have been
achieved.
•	Where corrective action has not yet been
completed, site inspections and progress
reports are used to gauge interim progress.
21

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Clean Air Act Enforcement
Summary Information

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Background
•	Projected emission reductions are reported in
the fiscal year in which the case is concluded
(e.g., date an administrative order is issued),
not necessarily in the year(s) the benefit is
expected to occur.
•	Projected pollutant reductions are the difference
between annual emissions prior to a settlement
agreement and annual emissions once
corrective actions are taken.

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Background
• Between FYs 2004 - 2006, emission reductions
from power plants decreased from 93% to 30%.
•	During same period, emission reductions from petroleum
refineries increased from 4% to 50%.
• Methods for estimating projected emission
reductions less reliable for non-utility industry
sectors (CEMS data generally not available).
•	For example, projected reductions for one case were based
on several emission estimation methods of varying reliability.

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Projected CAA Emission Reductions
FYs 2003 - 2006
Food Other
Production 7%	—
r\
Refineries	\	43%/	\
I	J	\	/	J OIG Sample
\	/utiiitie.	/ 57%
V	W 67%
Total CAA Reductions = 2.3 billion lbs
Total OIG Sample = 1.3 billion lbs.

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Projected CAA Emission Reductions
FY 2003
Chemicals
Production^
4% \ Other
\ 7%
Mobile
Sources /C
10% /	\ utilities
Food
Production
38%
41 %	40%
OIG Sample
60%
Total CAA Reductions = 320.4 million lbs
Total OIG Sample = 193.6 million lbs.

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Projected CAA Emission Reductions
FY 2004
Refineries
Other
3 Sample
5	78%
93%
Total CAA Reductions = 781.9 million lbs
Total OIG Sample = 607.9 million lbs.

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Projected CAA Emission Reductions
FY 2005
Other
Refineries 3%
13%	—	17%
0
1	— riiri Qor
utilities		OIG Sample
84 %	83%
Total CAA Reductions = 642.2 million lbs
Total OIG Sample = 536.2 million lbs.

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Projected CAA Emission Reductions
FY 2006
Other
10%
Food production
10%
Utilities
30%
Refineries
50%
Total CAA Reductions = 583.2 million lbs
Total OIG Sample = NA

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CAA Review Methodology
•	Selected two largest CAA cases from each
of FYs 2003, 2004, and 2005.
•	Also selected one large case from FY 2002.
Case identified through OIG query of OECA
database.
30

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CAA Review Methodology
• For each sample case:
•	Determined how the estimated reduction was calculated.
•	Compared process followed to CCDS guidance.
•	Determined how compliance with the enforcement,
agreement is tracked.
•	Determined whether projected reductions were occurring.
31

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CAA Cases Reviewed
Case
Date Final Order
Entered
Compliance
Date
Reduction (lbs.)
PSEG Fossil Inc.
7/26/02
2010
108,000,000
Alcoa Inc.
7/28/03
2011
130,000,000
Archer Daniels Midland Co.
8/21/03
2012
63,600,000
Virginia Electric and Power
Co.
10/3/03
2013
472,596,000
South Carolina Public
Service Authority
6/24/04
2012
135,300,000
Illinois Power Co.
5/27/05
2013
110,850,000
Ohio Edison Co.
7/11/05
2012
425,314,000
Total Projected Reductions
1,445,660,000

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Quality Assurance/Quality Control
for the CCDS Process
Basic steps in CCDS Quality Assurance/
Quality Control process:
•	Complete the CCDS form.
•	Conduct independent review of data on the form.
•	Reconcile inconsistencies and incomplete entries as needed.
•	Enter CCDS data into ICIS.
•	Certify that the data is complete and accurate at mid-year and
end-of-year.

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Compliance with CCDS Quality
Assurance/Quality Control Steps
Case
Complete
CCDS
Independent
Data Review
Reconcile
Enter into
ICIS
Certify
PSEG
Yes
No
Yes
Yes
Yes
Alcoa
No
No
No
Yes
Yes
ADM
Yes
Yes
Yes
Yes
Yes
VEPCO
Yes
Yes
Yes
Yes
Yes
SCPSA
Yes
Yes
Yes
Yes
Yes
IL Power
Yes
No
Yes
Yes
Yes
OH Edison
Yes
No
Yes
Yes
Yes

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Emission Estimation Methods -
Power Plants Cases
Case
Sulfur Dioxide (S02)
Nitrogen Oxides (NOx)
Particulate Matter (PM)
P re-
Compliance
Baseline
Post-
Compliance
Reported
Emissions
Pre-
Compliance
Baseline
Post-
Compliance
Reported
Emissions
Pre-
Compliance
Baseline
Post-
Compliance
Reported
Emissions
PSEG
CEMS
Removal
Efficiency
CEMS
Emission
Rate
Not Projected
Not
Projected
Alcoa
EPA
Inventory
Removal
Efficiency
EPA
Inventory
Removal
Efficiency
EPA
Inventory
Removal
Efficiency
VEPCO
CEMS
Removal
Efficiency
CEMS
Annual
Cap
Not Projected
Not
Projected
SCPSA
CEMS
Removal
Efficiency
CEMS
Emission
Rate
Stack T est
Manufacturer
Design Data
IL Power
CEMS
Emission
Rate
CEMS
Emission
Rate
Not
Documented
Not
documented
OH Edison
CEMS
Annual Cap
CEMS
Annual
Cap
Not Projected
Not
Projected

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Emission Estimation Methods - Archer
Daniels Midland Food Production Case
Reductions Projected for:
Sulfur Dioxide (S02), Nitrogen Oxides (NOx), Particulate Matter (PM),
Volatile Organic Compounds (VOCs), and Carbon Monoxide (CO)
Pre-Compliance Baseline
Post-Compliance Reported
Emissions
Various methods including:
•	Stack tests
•	CEMS
•	Material balance
•	Emission factors
•	Screening data
Removal efficiencies
36

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Methods Used to Track Compliance
with Interim Emission Requirements
Case
Interim
Reduction
Met?
CEMS
Stack
Test
On-site
Inspection
Company
Reports
PSEG
Yes
Yes
Yes
Yes
Yes
Alcoa
Yes
N/A
Yes
Yes
Yes
ADM
Yes
Yes
Yes
Yes
Yes
VEPCO
Yes
Yes
Yes
Yes
Yes
SCPSA
Yes
Yes
Yes
Yes
Yes
IL Power
Yes
Yes
Yes
Yes
Yes
OH
Edison
Yes
Yes
Yes
Yes
Yes

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Conclusions - CAA
•	For time period reviewed the majority of
projected reductions came from power plant
cases.
•	FYs 2004 - 2005 spike in projected reductions
came from a few large power plant cases.
•	Projected reductions for power plants are based
on more reliable data - CEMS.
•	Cases reviewed are on schedule to meet
projected emissions reductions.

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Conclusions - CAA
• Inconsistencies in how projected reductions
were calculated:
•	Not all regions included estimates for particulate matter
reductions from power plant cases.
•	Final compliance emissions based on different methods.
o Post-compliance annual cap.
o Post-compliance emission rate used to estimate annual
emissions (assumes no change in production).
39

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