11/23/87

Settling Enforcement Actions in Clean Air Act Nonattainment Areas Against Stationary Air Sources Which Will Not Be In Compliance By The Applicable Attainment Date

                             November 23, 1987

MEMORANDUM

SUBJECT: Settling Enforcement Actions in Clean Air Act
         Nonattainment Areas Against Stationary Air Sources
         Which Will Not Be In Compliance By The Applicable
         Attainment Date

FROM:    Thomas L. Adams, Jr.
         Assistant Administrator for Enforcement
          and Compliance Monitoring

TO:      Addressees


    This memorandum lists special factors to be considered, and requirements
to be imposed, in settling enforcement actions in Clean Air Act
nonattainment areas against sources that will not be in compliance by the
applicable attainment date.  These requirements apply where the source is
violating emission limitations for the pollutant(s) for which the area has
been designated nonattainment.  These requirements, which supplement those
of other general policy, are appropriate because these sources are
continuing to illegally contribute to the nonattainment status of the area
after the date that attainment was supposed to have been reached.  The
policy observes that shutdown by the specific attainment date may be the
appropriate relief in some cases, but lists factors and requirements in
considering whether an expeditious compliance schedule going beyond the
attainment date may be appropriate in others.

    This memorandum affects actions under Section 113(b) of the Clean Air
Act in nonattainment areas where the area was to have attained by December
31, 1982.  It supersedes the September 20, 1982 policy titled "Enforcement
Action Against Stationary Air Sources Which Will Not Be in Compliance By
December 31, 1982."  It also applies to those sources in areas which are
projected to, but will fail to, reach attainment by December 31, 1987.
Finally, the policy applies to areas with attainment dates set beyond
December 31, 1987 which pass without attainment.  No such areas in the last
category currently exist but we expect that new attainment dates will be set
for certain areas.


                                    -2-

Legal Issues


    The Clean Air Act requires areas to plan for attainment of the primary
ambient air quality standards for criteria pollutants ( e.g. ozone, carbon
monoxide, sulfur oxides, particulate matter ) by December 31, 1982.  Certain
ozone and carbon monoxide nonattainment areas received extensions until
December 31, 1987 pursuant to Section 172 of the Act.  Many sources are
unlikely to achieve timely compliance by even this later date.  Sources
which are out of compliance beyond the attainment date in a nonattainment
area not only violate the specific state regulation but also contribute to
the area's continuing nonattainment status.  This contribution becomes an
important factor to consider in enforcement efforts against these sources.

    Our view that a shutdown of the source is not necessarily mandatory in
all cases is based on the view that a district court generally has equity
power to fashion relief that allows a source in violation of an
environmental statute to continue in operation while taking steps to come
into compliance.  1/

  1/ Weinberger v. Romero-Barcelo, 456 U.S. 305 ( 1982 ).  See also Amoco
    Production Co. v. Village of Gambell, No. 85-1239, slip op. at 9 and 10
    ( U.S.S.C. March, 1987 ).

The Supreme Court has been careful to point out that the full scope of the
courts' discretion should be recognized in the absence of Congressional
intent to the contrary.  2/

  2/ Congress did limit the district courts' equitable power regarding
    sources which had obtained relief under the Steel Industry Compliance
    Extension Act of 1981 ( "SICEA" ).  EPA has always argued that the
    December 31, 1985 deadline in that Act is absolute except in a few very
    limited situations involving force majeure.  That position was recently
    supported by dictum in U.S. v. Wheeling Pittsburgh, No. 86-3456, slip
    op. at 15 ( 3rd Cir. May 18, 1987 ), where the court stated, "It is
    evident therefore from the language of the statute and its legislative
    history that Congress placed great significance on the ( SICEA )
    compliance dates and intended to limit, if not entirely eliminate, the
    district courts' equitable discretion to extend compliance."

                                    -3-

Threshold Criteria To Evaluate Extension of Non-Compliance

    As a general rule, the goal of any EPA enforcement action against a
source in a primary nonattainment area is to bring the source into
compliance as expeditiously as possible, but no later than the approved
attainment date.  EPA will not recommend entry of a consent decree that
allows the source to remain in operation and out of compliance beyond the
attainment date unless, at a minimum, all of the following threshold
criteria are met: 1) the source must be unable to comply by the attainment
date other than by shutdown, 2) the source must demonstrate that there is a
public interest in its continued operation which outweighs the environmental
cost of an additional period of noncompliance, 3) is there is any doubt
about the source's financial condition, the source must demonstrate that it
will have sufficient funds to be able to comply expeditiously, and 4) the
source must be, and must have been, undertaking good faith efforts to
comply.

    The following is a more complete discussion of each of the criteria.

    Criterion 1 - Inability to Comply by Attainment Date

    This evaluation must conclude that the source is physically unable to
install controls by the attainment date.  This conclusion should be fully
documented.  Financial constraints which prevent a company from moving
quickly to comply should not play a role here.

    Criterion 2 - Public Interest and Environmental Costs

    The determination of public interest must be made on a case-by-case
basis and should include consideration, at a minimum, of the type of
business, the magnitude of excess emissions, the amount of time needed to
comply, the public service nature of the source ( e.g. hospitals, electric
utilities ), the adverse public consequences which would result from closure
( e.g., significant unemployment impact ), and the impact on public health
and welfare.  The burden is on the source to provide information on the
benefits of its continued operation and to show that those benefits outweigh
the environmental cost of an additional period of noncompliance.  We expect
that in some cases the Agency will not find the public benefit sufficient
and will not agree to continued operation beyond the attainment date based
on this criterion.

                                    -4-

    Criterion 3 - Financial Condition of Source

    Regional Administrators should exercise judgement to determine whether
sufficient uncertainty exists as to the healthy financial status of the
source to warrant a detailed economic analysis.  This analysis should
determine whether the source can pay for the pollution control equipment.
Headquarters has the technical support, primarily through its "ABEL"
computer model, to assist in making this determination.  The lack of ability
to pay for the pollution control equipment in this case will no merely
affect the penalty requested by EPA but should result in the shutdown of the
source.  If a source is not financially abel to complete and expeditious
control program, then it should not be allowed to operate with excessive
emissions in a nonattainment area.  Expeditious compliance is a key
requirement for continued operation.

    Criterion 4 - Prior Good Faith Efforts To Comply

    Finally, you must determine whether the source has been and is currently
undertaking good faith efforts to comply with applicable emissions
standards.  In most cases, the sources have been aware of the state
requirements for a number of years and so "good faith" must be manifested by
actual efforts that have been reasonably effective.  Although in some cases
there may be an overriding interest in continued operation of the source
under an expeditious compliance schedule, generally a prior history of
disregard for environmental obligations should militate against further
extensions.

    We wish to emphasize that this policy should not be seen a general
invitation to renegotiate consent decrees.  Sources which have already made
a commitment, in the settlement of an enforcement action, to come into
compliance by the attainment date or sooner should be required to do so
unless the relevant circumstances clearly and convincingly warrant a
modification.  In cases where a consent decree already exists, EPA should
file a contempt action if the sources is violating the terms of the existing
decree.

Specific Requirements for a Consent Decree Allowing Post-Attainment Date
Compliance

    The terms of general policy on consent decrees must be followed.  1/

  1/ This guidance titled "Guidance for Drafting Judicial Consent Decrees,"
    issued on October 19, 1983, is GM #17 in the General Enforcement Policy
    Compendium of the Office of Enforcement and Compliance Monitoring.

In addition, the Agency should insure, at a minimum, that the decree
incorporates the following elements (some of which are listed to reemphasize
certain of the general policy requirements).

                                    -5-

    1) The source commits to comply with requirements for at least
reasonably Available Control Technology ( "RACT" ) if no Part D plan is in
force where one is required.  The consent decree should indicate that RACT
limitations  acceptable to EPA remain in effect and that the court retains
jurisdiction to enforce this provision until such time as a Part D plan
satisfying the requirements of Section 172 is approved by EPA and becomes
effective.  Then the source may apply to the Court for a modification of the
decree to conform with the approved requirements.

    2) The compliance schedule contains enforceable increments of progress.
    3) The consent decree requires interim emission limitations and controls
to the extent possible.  Emission reductions, while not mandated in every
case, should be required where possible.

    4) The consent decree includes monitoring requirements.

    5) The consent decree includes reporting requirements, including timely
reporting to EPA of the completion of each increment in the schedule.

    6) The consent decree provides for stipulated penalties.  At a minimum,
these penalties should apply to failure to implement interim controls,
failure to meet increments of progress in the compliance schedule, and
failure to demonstrate final compliance.

    7) The consent decree contains provisions preventing increases of
emissions from the source.  However, production increases may be allowed so
long as emissions per unit of production are decreased.  This will allow a
company to respond to increased business while at the same time providing an
additional incentive to reduce emissions.

    8) The consent decree requires payment of a significant cash civil
penalty.  The general Clean Air Act Stationary Source Civil Penalty Policy (
"Penalty Policy" ) of course applies.  3/

  3/ The current "Penalty Policy" was issued March 25, 1987 and will replace

    the policy issued September 12, 1984 found at V(Y) in the Clean Air Act
    Compliance/Enforcement Guidance Manual -- Compendium of Operative
    Policies.

The fact that the area is nonattainment beyond the attainment date should be
viewed as an aggravating factor under Section III.E of the Penalty Policy
and should result in a higher gravity component.

                                    -6-

    9) The consent decree explicitly reserves the right to seek further
injunctive relief, including shutdown of the facility, if the source does
not comply with the order.

    10) Source compliance extensions beyond the attainment date are not
allowed for sources which a company does not intend to control.  The CAA
requires expeditious shutdown of these sources.  4/

  4/ See the "Clean Air Act Enforcement Policy Respecting Sources Complying
    By Shutdown," issued November 27, 1985 found in the Clean Air Act
    Compliance/Enforcement Guidance Manual -- Compendium of Operative
    Policies at Part I (L).

Expeditious shutdown applies only if the company is not building a
replacement facility.  If the company is replacing the existing unit and
commits to commencing and completing construction of the new facility as
expeditiously as practicable, then EPA may agree to delay shutdown of the
violating source until the replacement facility is constructed and operable,
provided that the other criteria is the "shutdown" policy and this policy
are met.  In implementing this approach the Region will need to consider the
effect of any Clean Air Act sanctions which may limit construction of new
facilities in the area.

    11) Compliance through use of low-solvent technology is still governed
by the August 6, 1986 "Policy on the Availability of Low-Solvent Technology
Schedules in Clean Air Act Enforcement Actions," except that the statement
is that policy requiring compliance by the end of 1987 is modified by the
present policy.

Deferral to State Action

    The principles set forth in this memorandum should also be used in
conjunction with "timely and appropriate" guidelines to evaluate the
adequacy of state administrative or judicial enforcement action addressing
these sources.  5/

  5/ See "Guidance on `Timely and Appropriate' EPA/State Enforcement for
    Significant Air Violators" issued June 28, 1984 found in the Clean Air
    Act Compliance/Enforcement Guidance Manual -- Compendium of Operative
    Policies at Part I(I).


                                    -7-

Addressees:

    Regional Administrators
    Regional I-X

    Deputy Regional Administrators
    Regions I-X

    Regional Counsel
    Regions I-X

    Regional Counsel Air Contacts
    Regions I-X

    Air Management Division Directors
    Regions I, III and IX

    Air and Waste Management Division Director
    Region III

    Air and Toxics Division
    Regions VII, VIII and X

    Air, Pesticides, and Toxics Management Division
         Directors
    Regions IV and VI

    Air and Radiation Division Director
    Region V