March 22, 1996

    The Use of Information Other Than Reference Test Results for
Determining Compliance With The Clean Air Act


I.   INTRODUCTION

     In an October 1993 Federal Register notice (58 Fed. Reg. 
54648, 10/22/93), EPA solicited public comment on a proposal to
amend 40 C.F.R. Parts 51, 52, 60 and 61 to eliminate language
that has been read to provide for exclusive reliance on reference 
test methods as the means of demonstrating compliance with
emission limits under the Clean Air Act ("CAA"), and to clarify
that credible evidence can be used for compliance determinations. 
In the same notice, EPA proposed an "enhanced monitoring" rule
providing for direct continuous emissions monitoring for a number
of sources.  EPA has suspended development of the enhanced
monitoring rule while it attempts to develop a compliance
assurance monitoring (CAM) approach to serve the purpose of the
enhanced monitoring proposal, and intends to issue a CAM proposal
soon.  In a September 1995 draft of the CAM proposal EPA stated
that it would hold a public meeting prior to finalizing the
credible evidence revisions.  That meeting has been scheduled for
April 2, 1996.  This memorandum is intended to provide a focus
for that public meeting.

II.  BACKGROUND

     Over the past twenty years the Agency has published a number
of "reference test methods" and, in order to assure uniformity in
the application of emission standards, has required sources to
establish compliance with emission standards by use of those
reference test methods.  In theory a source would conduct testing
on a periodic basis utilizing these methods and would rely on the
comprehensive nature of this testing to assure compliance on a
day to day basis.
      In the interim more accurate emission monitoring devices 
have been developed. In addition, the EPA, the states and the
regulated community have gained a better understanding of the
specific facility and pollution control device operating
parameters that control emissions.  Today, as a practical matter
many sources determine compliance with permitted limits either
through the use of continuous emission monitors or by monitoring
key parameters of their production processes and pollution
control devices.
      Section 113(a) of the Act provides that the Agency may
bring an enforcement action "on the basis of any information
available."  However, in United States v. Kaiser Steel Corp, the
District Court ruled that, because of what it perceived to be
limitations in EPA's regulations, only reference method stack
testing could be used to establish violations of permit limits,
notwithstanding irrefutable scientific evidence that otherwise
demonstrated thousands of violations.  In the 1990  amendments to
the Clean Air Act Congress overrode the Kaiser decision,
providing that the duration of the violation could be established
by "any credible evidence (including evidence other than the
applicable test method)." [1]

     EPA is now considering proceeding to final promulgation of 
previously proposed revisions to 40 C.F.R. Parts 51, 52, 60 and
61 to revise regulatory provisions that have been read as
requiring exclusive reliance on reference test methods as the
means of determining compliance with emissions limits.  EPA
believes that these revisions are consistent with the CAA as well
as the language and intent of the 1990 CAA amendments.  The
revisions would provide sources with cheaper and more flexible
means for certifying compliance in permit compliance
certifications, and for asserting compliance in enforcement
actions.  For similar reasons, the revisions would benefit state
environmental agencies, EPA and the public.  EPA and states would
use credible evidence to more easily and effectively assess a
source's compliance status and respond to noncompliance, thus
more effectively protecting our nation's health and environment.

     This balanced proposal reflects the Agency's basic approach
to "common sense" environmental protection, which encourages
smarter, cheaper and more flexible means of achieving
environmental goals without compromising the fundamental health
and environmental protections provided by federal environmental
laws.  The credible evidence proposal removes cost barriers to
regular determinations of compliance by the regulated community
and regulatory authorities alike.  Allowing the use of emission
data other than reference test results is critical to other EPA
proposals to streamline CAA regulations, including EPA's draft
proposed CAM rule and Open Market Trading rule ("OMTR"). Under
the draft proposed CAM rule sources would be allowed to certify
compliance with applicable permit limits based on monitoring key
operating parameters. Similarly, in order to provide sufficient
flexibility for a broad pollutant trading scheme to function, at
least some sources would have to be allowed under the OMTR to use
means other than reference test methods to quantify the emission
reductions being traded.

     Members of the regulated community have expressed concerns
regarding the proposal, particularly regarding its effects on
emission standards and enforcement. Some regulated sources have
argued that allowing the use of credible evidence to determine
whether or not a source is in compliance with an emissions
standard increases the stringency of the standard; others have
argued that states, EPA and citizens will use credible evidence
to bring enforcement actions for minor violations.  As explained
below, EPA does not intend to affect the stringency of the
underlying standards.  However, the Agency recognizes, and indeed
intends, that the use of "credible evidence" will require some
sources to take steps to improve the degree to which they comply
with the Act.  The Agency intends to publish an enforcement
policy at the time of any final Agency action on  credible
evidence revisions to assist EPA Regional Offices and the states
in distinguishing between minor and insignificant violations that
need not be pursued in the first instance by judicial action and
significant violations for which prompt and aggressive
enforcement is appropriate.

III. PROPOSAL DESCRIPTION

     If promulgated, these credible evidence revisions would
enable state and Federal enforcement agencies and citizens to use
credible evidence as defined by the appropriate state or Federal
rules of evidence to prove violations of the CAA.  It would also
allow sources to use such evidence as a basis to dispute a state,
EPA or citizen allegation of noncompliance in an enforcement
action or to show that the noncompliance has been remedied.  EPA
also plans to propose in the upcoming CAM rulemaking related
changes to 40 C.F.R. Parts 64 and 70, which would provide for the
use of data other than reference test methods for certifying
compliance with the requirements of Title V of the CAA. 
     By clearly providing that the reference test methods are not
exclusive methods, EPA does not intend to alter the underlying
standards.  Rather, the Agency would still use the reference
methods for exactly what they are: test methods of reference
against which other data will be measured.  That is, the
reference methods will be used as the standard for determining
the credibility and precision of other emissions data and
measurements [2].  For example, EPA Reference Method 9 provides
for opacity measurements to be taken over a period of 6 minutes.  
A continuous opacity monitor may record opacity as often as once
every 15 seconds.  The Agency does not propose to provide that a
single opacity reading, spanning only 15 seconds, is sufficient
evidence to establish a violation.  In this example a violation
could only be established by the continuous monitor data where a
series of such measurements over a six minute
period demonstrated a noncompliance.

IV.  BENEFITS TO THE PUBLIC AND THE REGULATED COMMUNITY

     1.  Reduces Industry Burdens in Compliance Certifications 
     Incorporating credible evidence into compliance
certifications and compliance determinations in general is fully
consistent with the language and intent of the CAA and the 1990
CAA amendments, and with EPA's goals regarding burden reduction,
the use of common sense, and effective environmental law
enforcement.  Unlike the 1993 enhanced monitoring proposal, the
credible evidence revisions would require no additional
information gathering or recordkeeping by sources.  Instead, the
revisions would allow sources to rely on accurate information,
much of which is already available and utilized, in order to
assert compliance with emission standards.  The proposal also
allows EPA and states to use this same credible information for
compliance and
enforcement purposes.

      Both EPA and industry now routinely rely on many types of 
information, including engineering calculations, indirect
estimates of emissions, and direct measurement of emissions by a
variety of means, in order to assess compliance with CAA 
requirements.

     Where available, CEM data and parametric monitoring data
(such as the operating temperature and air flow rate of a  
regenerative thermal oxidizer) generally provide reasonably
accurate data regarding a source's compliance with emission
limits and standards.  These data also generally cover a greater
percentage of a source's time in operation and are more
representative of a source's ongoing compliance status than
sporadic performance testing.  Under EPA's credible evidence
proposal, sources would generally be able to use this accurate, 
already existing monitoring data to certify compliance with their
operating permits.  This flexible, common sense approach compares
favorably to the "exclusivity" approach, which limits compliance
data to infrequent performance tests conducted under conditions 
that may not reflect the source's actual in-operation emissions. 
The exclusivity approach can also be expensive and burdensome: 
reference method tests can cost up to $100,000 for a series of
tests and can take a week or more to set up and complete.

     2.  Reduces Potential Industry Burdens in Enforcement
Actions
      By providing industry with flexible, cheap and accurate
means of determining compliance, this proposal significantly aids
sources in certifying compliance with emission limits.  Moreover, 
the proposal assists industry in more general compliance and
enforcement contexts.  For example, the 1990 CAA amendments
provided in certain circumstances that if a source is notified of
a violation of an emission limit or other standard, the violation
can be presumed to continue until the source demonstrates its
return to compliance.  CAA 113(e)(2).  Under an exclusivity
approach, a source might be deemed to remain in violation after a
non-complying reference test until it could conduct (and pay for)
a second set of reference tests, even if it identified and fixed
the problem immediately.  Today's proposal would eliminate this
inflexible, expensive result by allowing sources to demonstrate a
return to compliance through other credible evidence.

     3.  Reduces Burdens on EPA and States

     Not only is this proposal less burdensome for industry; it
also allows EPA and states to perform essential functions with
fewer resources.  Periodic development, review and observation of
reference method tests are resource intensive.  EPA and state
compliance assessment activities frequently involve an inspection
where direct emissions data may not be readily available, an
information request, a performance test, and an assessment of the
test.  In contrast, the use of credible information in permit
compliance certifications, and in compliance activities 
generally, allows states, EPA and sources to more readily and
rapidly assess whether a source is in compliance with its
emissions limits.  This will enable states and EPA to take
appropriate compliance and enforcement action to protect public
health and the environment.

V.   INDUSTRY'S CONCERNS, EPA'S RESPONSES

     1.  EPA's Enforcement Approach

     Some industry representatives have expressed concern that
the use of credible evidence in compliance determinations will
reveal multiple minor violations for which EPA, the states or
citizens will bring lawsuits.  This is not EPA's intent, and EPA
does not expect that it would occur.  EPA focuses its compliance
and enforcement resources on violations that (1) may threaten or
result in harm to public health or the environment, (2) are of
significant duration or magnitude, (3) represent a pattern of
noncompliance, (4) involve a refusal to provide specifically
requested compliance information, (5) involve criminal conduct,
or (6) allow a source to reap an unfair and illegal economic
windfall.  As discussed, EPA's experience is that citizen
enforcers generally focus on similar violations.
      An examination of EPA's judicial enforcement cases over the
past few years reveals that EPA has focussed its judicial
enforcement resources on large, significant cases rather than a 
large number of relatively minor matters.  Two recent cases
illustrate the point.  The first is EPA's nationwide enforcement
action to address a wood product company's failure to obtain
preconstruction permits and install required pollution controls
at numerous wood panel manufacturing plants.  Each of the plants
involved in the action had emitted or had the potential to emit
hundreds of tons of ozone-forming organic chemicals, which cause
smog.  In addition, these illegally constructed plants allowed
the company to obtain an unfair economic advantage over its
competitors.  The violations persisted for as long as 10 years. 
EPA and the Department of Justice (DOJ) negotiated a judicial
settlement under which the company would install state of the art
pollution control systems at 14 plants, at an estimated cost of
$70 million, that would reduce emissions from these facilities by
more than 90%. The company also agreed to pay a civil penalty of
over $11 million.

     In the second example, EPA and DOJ brought a judicial action
against a hazardous waste incinerator that modified its facility
to substantially increase its air emissions without obtaining
required preconstruction permits or installing required pollution
control devices.  At trial, evidence was presented that the
company had exceeded its limits for authorized emissions by as
much as a factor of 100, and emitted substantial amounts of 
noxious and toxic chemicals (including toxic metals as lead,
cadmium and chromium) where no emissions were authorized.  The
evidence established that the source had violated its permitted
limits and operated unpermitted sources each and every day for
over eight years and had ignored state administrative orders and
even a judgment from the state supreme court.  The Federal
District Court entered an injunction (which is currently stayed
pending an appeal) that halted further operation without a permit
and imposed a multimillion dollar fine on the operator.
      In contrast, EPA's approach to minor unexcused violations
generally has been to exercise prosecutorial discretion and use
compliance mechanisms such as notices of violation and
administrative compliance and penalty orders to ensure a return
to compliance.  Where appropriate, EPA has also exercised its
discretion to take no enforcement action at all.  EPA does not
intend to use credible evidence to change this general approach.  
    EPA considers enforcement against minor CAA violations to bea
very low enforcement priority and believes that it has sufficient
enforcement and compliance assistance tools to respond to such
violations without the need to file an action in Federal District
Court.  EPA has a balanced enforcement program that seeks to
assure compliance using the mix of the compliance and enforcement
tools available to it. Accordingly, absent extraordinary
circumstances, such as where a company's negligence occasioned a
significant risk to the public, EPA does not favor filing
judicial enforcement actions against sources that have had
exceedances of short duration that were caused by a problem that
the source quickly fixed.  Although such exceedances would
technically be violations (unless they fell within a compliance
exclusion), they generally would not be treated as an Agency
enforcement concern because they did not have a significant
environmental impact and were not a continuing problem.
       Likewise, if a source had occasional exceedances of the
emission standard that were slightly in excess of the standard
and solved the problem, EPA would not generally recommend filing
a civil enforcement action because the environmental impact was
minimal and the source returned to continuous compliance.   Also,
if a source was installing a new unit subject to the New Source
Performance Standards (NSPS) and had difficulties getting the
control equipment to operate properly after the "shakedown"
period permitted before the initial performance test (40 C.F.R.
60.8(a)), but solved the problems promptly after the performance
test, this would also be a low enforcement priority - -
particularly where innovative control equipment was being
employed for the first time.
       Finally, we note that the NSPS already generally excuse
sources from compliance with some emissions limits during periods
of startup, shutdown or malfunction.  See 40 C.F.R. 60.11(c). 
Some NSPS additionally excuse sources from compliance during
certain specified periods.  Emissions exceedances monitored
during any of these periods are not considered violations 
(although sources are under a separate duty to minimize emissions
at these times). Moreover, some NSPS specify averaging periods
for determining compliance and noncompliance.  As a result, many
minor emissions values above the standard, when averaged with
other values in the relevant averaging period, do not emerge as
violations.  The credible evidence proposal does not change these
averaging periods or their results. 

     2.  Federal and Citizen Enforcement Experience

     In February, 1996, EPA reviewed citizen enforcement actions
under the Clean Water Act (CWA).  We chose CWA citizen actions
because they have been far more numerous than CAA actions, and
because the CWA utilizes discharge monitoring reports directly
for enforcement purposes, which in some circumstances would be
similar to using credible evidence to prove CAA violations.  To
determine whether these citizen actions involved long-term,
significant noncompliance, we examined the penalties and
injunctive relief resulting from the suits.  These figures, taken
together, are reasonable indicators of the seriousness of the
underlying violations.
       Our evaluation confirmed that CWA citizen suits generally
do not involve sporadic, inconsequential violations.  The
National Environmental Law Center (NELC) in Massachusetts
provided information showing that their concluded cases involved
an average penalty of $714,134, and a median penalty of $250,000.
Each case also included injunctive relief.  For those cases where
duration of violation information was available, the average was
almost 575 days of violation per case.  The New Jersey Public
Interest Research Group (NJ PIRG) reported similar results, with
an average per case penalty of $702,800.
       To date, there have far fewer CAA citizen suits than CWA
suits.  However, among the few CAA suits filed to date, there
have been at least two notable cases involving serious
violations.  In NWF v. Copper Range Co., a citizen suit filed by
the National Wildlife Federation in which the United States  the
states of Wisconsin and Michigan intervened, the facility at
issue was one of the largest sources of particulate matter in the
Upper Peninsula of Michigan, emitting particulate at a rate of
230 lbs/hour -- over five times its permitted limit.  The
emissions contained many toxic air pollutants, including mercury,
arsenic, cadmium and lead.  The suit was settled in 1995 for
civil penalties of $4.8 million and injunctive relief valued at
over $200 million.  In Sierra Club v. Public Service Company, 894
F.Supp. 1455 (D.C. Col. 1995), the district court held that a
power company generating station had committed over 19,000
violations of opacity emission standards over a period of  years;
the court has not yet ruled on an appropriate penalty.  In
January 1996 EPA issued a notice of violation to this facility
for thousands of subsequent violations.
       In addition, EPA examined its docket of concluded federal
judicial actions that involved NSPS violations, to illustrate its
own approach towards these cases.  Not all of these NSPS cases
involved emissions violations. Nonetheless, the results support
EPA's general argument that federal cases are typically brought
to address substantial environmental problems.  Over the last
five years, the Department of Justice reports that the average
NSPS case was concluded for a penalty of $181,249 (median
penalty, $89,600).  No compilation of the value of injunctive
relief was readily available.

     3.  Stringency

     Some industry representatives have argued that the credible
evidence proposal increases the stringency of emissions standards
or limitations.  In their view, a source must comply with NSPS
and other emission standards only during periods of reference
testing; during all other operating periods, sources need  only
ensure that pollution control equipment is running properly. They
argue that the credible evidence proposal would effectively
increase emission standard stringency because it would result in
compliance being measured during many other operating periods.

     EPA does not believe that the credible evidence proposal
will increase the stringency of the standards.  As detailed in
the October 1993 Federal Register notice, EPA's position is that
emission standards generally must be complied with at all times,
except for periods where noncompliance is specifically excused.  
As discussed above, both the general NSPS provisions and various
specific NSPS subparts excuse noncompliance during certain
specified periods. Apart from these periods, sources are required
to continually comply with their emission limits.  Accordingly,
increased compliance monitoring does not increase emission
standard stringency.  In Sierra Club v. Public Service Co., the
only federal judicial decision to address this issue since the
passage of the 1990 CAA amendments, the court rejected the
defendant's argument that a citizen group's use of CEM data and
reports as evidence of violations effectively changed the
underlying standard.
       EPA agrees that one effect of the proposed rule would be
to increase the probability that a noncomplying facility will be
detected.  This increased detection of noncompliers benefits the
majority of sources that do routinely comply by ensuring a level
playing field so that others do not obtain a competitive
advantage through noncompliance.  To use a simple analogy, the
Agency is not proposing to change the speed limit for vehicles on
Federal highways; rather, it is proposing to allow the use of
radar guns to more readily detect speeders.

     4.  Recordkeeping Considerations

     Some industry commenters have suggested that the adoption of
the credible evidence proposal would force sources to increase
the amount of records that must be kept.  As discussed above, the
proposal does not require the maintenance of any additional
records or reports.  In many circumstances, the information that
a source already keeps regarding their emissions and control
device performance could be used to assert its compliance status
in an enforcement context.

     In the context of compliance certifications, some
commentators have argued that to require the use of credible
evidence would be to require a source to scour all records
throughout the plant -- "go through every file cabinet" -- and
create an enormous recordkeeping burden.  The CAM rule as
presently envisioned would address this concern by providing a
mechanism, the CAM Plan, where the permitting authority and the
source would negotiate and agree on a limited amount of data that
would have to be reviewed in order to certify compliance.  To
prevent fraud, a source could not ignore other information that
it became aware of that showed noncompliance, but would be under
no affirmative obligation to generate or search out such
information.

          ENDNOTES

[1]  The legislative history of this provision states that it
"clarifies that courts may consider any evidence of violation or
compliance admissible under the Federal Rules of Evidence and
that they are not limited to consideration of evidence that is
based solely on the applicable test method in the State
implementation [plan] or regulation." S. Rep. No. 101-228, Dec.
20, 1989, at
366.

[2]  The National Bureau of Standards maintains a number of
standards against which other measuring devices, used in
scientific or commercial applications, are calibrated. Similarly,
where a New Source Performance Standard or permit requirement
specifies EPA Method 25A, for example, for determining the amount
of volatile organic compounds ("VOCs")  that are emitted, the
"other evidence" that could establish compliance would have to
relate to the likely measurement of VOCs that would have been
obtained by a Method 25A measurement at that point in time.  This
could include consideration of key operating parameters for the
facility as correlated with emissions during a Method 25A test.