Handling Non-Compliance and Audit Policy

Handling Non-Complianceand Audit Policy Managing Non-Compliance Malcolm C. Weiss (310) 712-6822 Jeffer, Mangels, Butler & Marmaro LLP February 28, 2006 2688706 v3

Today’s Topics • Compliance certification requirements • Responsible official • Penalties • Handling non-compliance • EPA Audit Policy

Today’s Topics • Handling Non-Compliance • EPA Audit Policy

Identify all applicable regulations Confirm possession of permits Review permit conditions Review emission limits Review compliance history Documen- tation and ??? • Amnesty • Rule 219 Exempt • Present • Future • Federal • State • Local • NOVs/NTCs • Source Tests • Variances • Abatement Orders • Audit Reports • Complaints • Interviews Determining Compliance

For Non-Compliance Situations What If You AreNot In Compliance? • Disclosure (application) • Alternative Operating Conditions (AOC) for Title V • Variance / Order for Abatement for District Requirements • Variance never recognized by EPA

Disclosure • Duty to supplement or correct your application • Upon becoming aware of a lack or incorrect information • Promptly submit supplementary facts or corrected information

For Non-Compliance Situations Some Districts Use AOC • Alternative Operating Conditions (AOC) • Granted by the Hearing Board • Recognized if approved by EPA (45 day notice) • Shields from enforcement of otherwise applicable requirements

Alternative Operating Conditions • Variance companion • Does not cover federal rules, regulations or permit conditions (e.g., NSPS, NESHAPS, etc) • Amends Title V permit

For Non-Compliance Situations Granting an AOC Requires • Facility is or will be in violation • Due to conditions beyond company’s control • Taking would be without corresponding air benefit • Reduce excess emissions to the maximum extent feasible, etc.

Hearing Board Order • Order must include: • Emission limits • Operational requirements for any source at the facility • MR&R • Schedule of increments of progress • Term

Incentives for Self-Policing: Discovery,Disclosure, Correction and Prevention ofViolations – “Audit Policy”

EPA’s Audit Policy 65 Fed. Reg. 19617 (April 11, 2000) 60 Fed. Reg. 66706 (Dec. 22, 1995) Can reduce exposure to fines and penalties for violations If specified requirements are met

EPA’s Audit Policy • Can • Eliminate “gravity-based,” not economic benefit penalty component • Reduce chances for criminal prosecution • Avoid routine requests for audit reports • If . . .

EPA’s Audit Policy • Systematic discovery is through audit system or CMS • Voluntary discovery, not from applicable requirements • Prompt disclosure (21 days) • Discovery and disclosure are independent of Gov’t or 3rd parties

EPA’s Audit Policy 5. Expeditiously remedy harm caused 6. Prevent recurrences 7. No repeat violations 8. Other violations excluded 9. Cooperation

Facility Disclosures

Making a Disclosure

Environmental Audit Internet Resources

Handling Non-Complianceand Audit Policy Managing Non-Compliance Malcolm C. Weiss Mweiss@jmbm.com (310) 712-6822 Jeffer, Mangels, Butler & Marmaro LLP February 28, 2006 2688706 v3

Handling Non-Compliance and Audit Policy