Idaho's Air Enforcement Program Office of Inspector General Audit Report Air Idaho's Air Enforcement Program E1GAF8-10-0018-8100249 September 30,1998 September 30, 1998 MEMORANDUM SUBJECT: Idaho's Air Enforcement Program Audit Report No. E1GAF8-10-0018-8100249 FROM: Truman R. Beeler Divisional Inspector General for Audits Western Audit Division TO: Chuck Clarke Regional Administrator EPA Region 10 Attached is our final report titled Idaho's Air Enforcement Program. The overall purpose of the audit was to evaluate the effectiveness of the State of Idaho's administration and EPA Region 10's oversight of the stationary source air enforcement program in Idaho. We concluded that the State's administration and the Region's oversight of the stationary source air enforcement program for Idaho's significant violators were not sufficient to ensure compliance with federal and State laws and regulations. We believe that improvements are necessary to prevent threats to public health and the environment. This audit report contains findings that describe problems the Office of Inspector General has identified and corrective actions the OIG recommends. This audit report represents the opinion of the OIG and the findings contained in this audit report do not necessarily represent the final EPA position. Final determinations on matters in this audit report will be made by EPA managers in accordance with established EPA audit resolution procedures. Accordingly, the findings described in this audit report are not binding upon EPA in any enforcement proceeding brought by EPA or the Department of Justice. ------- ACTION REQUIRED In accordance with EPA Order 2750, you, as the Action Official, are required to provide our office with a written response to the audit report within 90 days of the report date. The response should address all recommendations. For corrective actions planned but not completed by the response date, reference to specific milestone dates will assist us in deciding whether to close this report. We have no objection to the release of this report to the public. We appreciate the cooperation from your staff and the Idaho Division of Environmental Quality staff during this audit. Should you or your staff have any questions about this report, please call me at (415) 744-2445, or Charles Reisig of our Seattle Office at (206) 553-4032. Attachment Distribution: APPENDIX D EXECUTIVE SUMMARY INTRODUCTION The Clean Air Act, as amended in 1990, gives EPA authority to set and enforce national standards to protect human health and the environment from emissions that pollute the air. EPA Region 10 (the Region) has granted authority to the State of Idaho (the State) to implement and enforce the stationary source air program through approval of the State Implementation Plan for the Control of Air Pollution in the State of Idaho. The audit focused on enforcement activities related to stationary source significant violators (SVs) in the State. OBJECTIVES The overall purpose of the audit was to evaluate the effectiveness of the State's administration and the Region's oversight of the stationary source air enforcement program. The specific objectives were to evaluate whether the State's: . Enforcement actions were appropriate and penalties were of sufficient magnitude to have a credible deterrent effect on major air pollution sources; . Enforcement activities resulted in timely return of sources to compliance; and . Inspection procedures ensure that all significant air pollution violations were identified. RESULTS IN BRIEF The State's administration and the Region's oversight of the stationary source air enforcement program for SVs were not sufficient to ensure compliance with federal and State laws and regulations. We believe that significant improvements are necessary to prevent threats to public health and the environment. ------- The Idaho Division of Environmental Quality (DEQ) needs to make significant improvements in its air enforcement program because: (i) enforcement actions were not appropriate and penalties were not of sufficient magnitude to have a credible deterrent effect on major air pollution sources; (ii) enforcement activities did not result in timely return of sources to compliance; and (iii) inspection procedures did not ensure that all significant air pollution violators were identified. We also found that: (i) emission reports were not reviewed timely to ensure sources were in compliance with applicable emission limits; and (ii) SV data was not reported accurately. The Region's oversight of DEQ's enforcement program also needs significant improvement because the Region did not: (i) establish enforcement criteria for assessing the State's program; (ii) perform any program reviews of the State's air enforcement program after April 1993; and (iii) use its enforcement authority effectively when the State was unwilling or unable to take timely and appropriate enforcement action in response to violations. In addition, the Region's Federal Manager's Financial Integrity Act (FMFIA) assurance letter to the Administrator did not report the weaknesses in the administration and oversight of the State's air enforcement program as a material deficiency in management controls. Lack Of Enforcement Against Many Stationary Source Significant Violators Enforcement actions, including the use of penalties, were often insufficient to bring SVs into compliance with federally enforceable air regulations and the Rules and Regulations for the Control of Air Pollution in Idaho. Enforcement actions were neither made nor escalated to deter SVs from gaining an economic advantage as a result of their violations. Of the few penalties that had been assessed, none included amounts for the economic benefit gained from noncompliance. Also, the penalties that we reviewed were significantly lower than the amounts under the guidelines of EPA's Clean Air Act Stationary Source Civil Penalty Policy. In addition, DEQ was not meeting EPA's Timely and Appropriate Enforcement Response to Significant Air Pollution Violators guidance for timely resolution of the violations. An adequate enforcement program had not been implemented in the State mainly because DEQ focused on compliance assistance rather than enforcement to bring sources back into compliance. However, when compliance assistance failed to timely bring the sources into compliance, appropriate enforcement actions were not taken. Also, a contributing factor to DEQ's insufficient emphasis on enforcement was the Compliance Assurance Agreement between DEQ and the Region. This enforcement agreement did not require DEQ to follow EPA enforcement guidance. Insufficient Inspections DEQ's inspection activity did not provide adequate coverage to ensure that all SVs were identified and reported timely. DEQ did not inspect sources as frequently as required by EPA guidance which states that all major sources shall be inspected annually and all potential major sources shall be inspected biennially. In addition, reports of inspections were not prepared timely in accordance with DEQ's guidance. As a result, there is increased risk that significant air pollution violations will not be identified and resolved within a reasonable period of time, which can adversely impact human health and the environment. These conditions occurred because the Region had not required DEQ to meet EPA's Inspection Frequency Guidance, and DEQ's guidance for timely finalization of inspection reports was not adequately communicated to DEQ inspectors. Reviews Of Source Emissions Reports Were Not Timely DEQ did not review source emissions reports timely, resulting in a significant backlog of emissions reports that were pending review. These reports are required by permits and consent orders and provide important emissions information that should be reviewed timely to determine source compliance with applicable emission limits. A lack of review can lead to violations going undetected for long periods of time and enforcement action not being ------- taken timely. This condition occurred because DEQ did not provide sufficient resources needed to eliminate this backlog. Significant Violator List Inaccurate The Region did not ensure that data reported on the SV lists for the State was accurate and complete. A review of 37 sources reported on SV lists for DEQ disclosed inaccurate data for half of those sources. EPA uses the SV list as an oversight tool to ensure that SVs are addressed and resolved timely and appropriately. EPA's guidance provides definitions of an SV and criteria for the various action dates reported on the SV list. Inaccurate SV reporting hinders the Region's ability to monitor the timeliness and appropriateness of enforcement actions and resolution of SVs. This condition occurred because the Region did not establish adequate procedures to ensure that the data reported on the SV lists conformed to the reporting criteria specified by EPA's guidance. Insufficient Oversight By The Region The Region did not perform sufficient oversight of the State's air enforcement program. This contributed to the weaknesses in the State's enforcement program which did not meet Clean Air Act requirements. Specifically, the Region did not: (i) establish criteria for assessing the State's enforcement program; (ii) perform any program reviews of DEQ's air enforcement program after April 1993; (iii) use its enforcement authority effectively when the State was either unable or unwilling to pursue timely and appropriate enforcement action in response to violations; or (iv) report the weaknesses in the State's enforcement program as management control deficiencies to the EPA Administrator as required by the Federal Mangers Financial Integrity Act. The Region attributed the conditions to three main causes: (i) a loss of positions and experienced staff because of two recent reorganizations; (ii) difficulty in determining the level of oversight to provide because the states have requested more autonomy and flexibility under performance partnership agreements; and (iii) a lack of clear criteria defining oversight under performance partnership agreements. RECOMMENDATIONS Principal recommendations to the Regional Administrator are to: • Require DEQ to develop and implement enforcement policies and procedures which are consistent with EPA enforcement guidance. • Ensure major and potential major source inspection coverage is in accordance with EPA's Inspection Frequency Guidance. • Implement procedures that ensure SV data is accurately reported on the Region's SV lists. • Revise the Compliance Assurance Agreement with DEQ to include EPA enforcement guidance as criteria for assessment of the State's stationary air enforcement program. • Conduct, at least annually, evaluations of the State's air enforcement program for SVs for consistency with EPA guidance. • Report the weaknesses in the administration and oversight of the stationary source air enforcement program for SVs in the State as a management control deficiency in the next FMFIA assurance letter to the EPA Administrator. • Withhold final approval of the State's Title V operating permit program until the State establishes procedures for enforcement which are consistent with EPA's enforcement guidance. • Assume responsibility for enforcement of the stationary source air program if the State is unable or unwilling to implement an enforcement program consistent with EPA guidance and the Clean Air Act. Auditee Comments and OIG Evaluation ------- A draft report was provided to the Region and DEQ on July 31, 1998 for their comments. Both the Region and DEQ responded to the draft report on August 31, 1998 and their responses are included as APPENDIX C to this report. The Region concurred with the recommendations and described corrective actions that have been taken or will be taken. It also commented that it has already taken a number of actions to begin addressing some of the major findings reported. These actions included frank and open discussions at the highest levels of management in both agencies to jointly work through the steps to improve DEQ's air enforcement program. DEQ did not concur with the findings and recommendations. It stated that its programs have performed according to established agreements and in a manner protective of public health and the environment at all times. It commented that the report inappropriately emphasized differences in DEQ's administration and implementation of its program compared to a preestablished set of national criteria that DEQ had never agreed to strictly comply with. In addition, DEQ stated that strict adherence to national policy as opposed to the operating principles DEQ agreed to operate its program under in no way points to poor performance or ineffectiveness in meeting its goals. The corrective actions taken or planned by the Region will significantly improve the stationary source air enforcement program in Idaho. We agree with those actions. In regard to DEQ's response, we believe the conditions described in this report clearly demonstrate a need for major improvements. DEQ's enforcement actions were not consistent with EPA enforcement guidance and often were insufficient to bring SVs into compliance with federally enforceable air regulations and the Rules and Regulations for the Control of Air Pollution in Idaho. While the Compliance Assurance Agreement between the Region and DEQ did not specifically require DEQ to follow EPA enforcement guidance, it did state that it is DEQ's goal to build an adequate and balanced compliance program which will result in enforcement processing consistent with EPA's SV guidance. ------- |