Violation, Education and Documentation

FROM THE SEPTEMBER ISSUE: Up-to-date knowledge of environmental permits and laws, as well as thorough record keeping, can prevent noncompliance that results in costly penalties.
By Tim Albrecht | August 15, 2018

In the past five years, EPA has levied $12.7 million in penalties against ethyl alcohol facilities, most in violations of the Clean Air Act, says Jessica Karras-Bailey, principal with RTP Environmental Associates Inc. That includes 306 formal actions by EPA at 172 facilities, along with 165 informal actions. Each violation under the Clean Air Act can cost a producer a minimum of $37,500 per day, up to $97,229 per day.

It’s an arduous task for producers to ensure their permits are up to date and all regulations are met. But the best method begins with management, she says. “Management has to show that compliance is important to them. If you have supervisors who don’t care, the employees won’t care. People look to management for guidance of their work.”

Enforcement Agencies
Regulatory compliance is enforced in a variety of ways and by different agencies, either at the federal level by EPA, at a state level or even on a local level. EPA enforces most permits and all federal environmental regulations, and levies the highest fines of all enforcement agencies for actionable violations, says Eric Sturm, owner and lead consultant at Air Regulations Consulting LLC.

“The next level is state agencies that can levy fines at a smaller level, such as $10,000 a day,” Sturm says. “They’re the ones that can enforce on the air permit, state regulations and federal regulations that they adopt. Finally, there are local agencies in some states that are a subset of the specific state. It’s almost like a Russian [nesting] doll of enforcement, there’s local, state and federal.”

Splitting up parts of the plant with designated enforcement agencies increases the efficiency of EPA and state agencies, enabling regulation of more areas overall, Karras-Bailey says.

EPA might handle inspections of certain areas of a plant and production because it handles the registration and updates of those areas, such as risk management plans. “Risk management plan [noncompliance] is a Clean Air Act violation, which has to do with chemical storage and how you control certain chemicals listed under the regulation, such as denaturant or anhydrous ammonia,” she says. “If those are on site, you have to have an RMP and that plan has a number of procedures and requirements that you have to ensure you hit to comply with EPA rules.”

EPA might step in at the state level if a state inspector has reason to suspect federal compliance deficiencies, or if a specific state doesn’t have enough resources to follow up on a certain program.
“EPA could also get involved if a site voluntarily contacts them to say they’ve had violations and they want them to know in order to get in compliance,” Karras-Bailey says. “There are self-disclosure policies that outline how to do that and usually sites will work with an attorney to go through that process. Also, if you’re a bad neighbor and you’re receiving complaints.”

Ambiguous Permits
Applications for construction permits required through the Clean Air Act are issued through state or local agencies and can number from just a few pages to more than 1,000, depending on the complexity of the project, Sturm says. But the process varies among states.

“Most states already have a kind of packaged permit for the ethanol industry, so they’ll tweak that to fit the specific project,” Sturm says. “It’s always different from state to state. Lastly, there is a public notice period for 30 days and if there aren’t any comments, the permit is issued. The entire process can take anywhere from six months to a year.”

The fact that each state has different permit regulations, the short time frame a regulator has to draft the permit, and the “absolutely vague” and “arbitrary” requirements of some permits can lead to violations for a producer, Sturm says. “A lot of times it’s the state permit writer giving out a bad permit and it’s impossible to follow.

“With every permit that we help companies get, we’re always commenting on the conditions and requirement sections of the permit,” Sturm says. “When a permit writer has to assess and write very complex rules and requirements into a permit, it can get very difficult. Almost any lawyer would tell you that environmental regulations are the toughest regulations in the U.S. to follow.”

Penalties and Bad Press
EPA’s fines can pile up. The agency can recoup what’s called economic benefit from violations, beyond the actual fines, Sturm says. “What’s common is if someone did a project and didn’t get a permit for it, which might have required a control device, EPA could fine them whatever avoided costs the producer got for not installing that control device. So that’s $37,500 per day plus the economic benefit.

“It can also look bad on the company and the industry itself, as you’re going to be in the newspaper,” Sturm says. “So, it’s a bruise on your company and the industry when there are fines and penalties on environmental standards being seen by the public.”

Overall compliance helps make the case when a mistake leads to an unintended violation. “One reason to stay compliant and do your best to show the violation was an honest mistake is the EPA may end up being a little more lenient and be willing to negotiate your fine with you.”

Similarly, a plant might come into question if it keeps conducting quick, temporary fixes on a troublesome piece of equipment in lieu of a solid repair, Karras-Bailey says. “If you’re a repeat offender, it can cause more problems with the EPA. It brings into question, if you’re having the same problem with a certain violation, are you really trying to stay compliant?

“A couple other benefits of staying compliant are if you have a sustainability program, or other good-neighbor policies, you can actually use that to promote your business, despite that not being specifically what you’re selling. Or if you have a bad compliance record, when you go to get a new permit, that process can be much slower.”

Carefully Compliant
One of the best ways to avoid penalties is to ensure the permitting process is done by knowledgeable experts, Sturm says. “Many times, states will put in extra requirements that are unnecessary. We can use the state for informational purposes, but we should never lean on them as a crutch. Producers should understand the permit and requirements on their own. We help companies understand every part of their permit. A lot of times, it comes down to one single word that leads to noncompliance.”

And staying up to date is important. EPA and states issue new rules frequently and might not adequately inform all affected plants of certain compliance steps, Sturm says. “That’s probably the toughest part, is having someone on your side who’s watching when the new rules come out and how they affect the facility.”

Steve Roe, president of Little Sioux Corn Processors in Marcus, Iowa, says he enlists many companies to help with compliance. “We have an air quality engineer out of Fort Collins, Colorado, that we use for all of our air issues, including emissions, construction permits and compliance. We also use them to help file all the required periodic reports.

“As far as monitoring compliance internally, Chris Williams (plant manager) and I monitor that to make sure we have a checklist and we keep a list of all of our permits. We have it set up so that our maintenance system puts out a reminder to check our permits to ensure they’re still valid and alerts us if we have one upcoming that we need to get updated.”

That type of compliance management system is helpful in understanding permits and compliance obligations, and ensuring systems are in place to meet them, Karras-Bailey says. “For example, do you have to do daily monitoring on your control devices; are you recording that; do you have standard operating procedures for maintenance; are you submitting your periodic reporting that’s due if there is stack; do you have a way of tracking when those activities occur? So, having a system and being able to check that system is what’s important.”

Sturm says documentation is the most important aspect of compliance, and Air Regulations Consulting assists producers with tracking. “That involves going through and making sure you can document for each condition in your permit, how you meet that condition and what record you show when the inspector asks how a producer is in compliance with the requirement. Building up a documentation system is good.”

Without documentation, he adds, compliance isn’t meaningful. “It’s not that laborious, it’s just the matter of doing it. Some of it is just having a checklist and going down the list on a regular basis like you’re required. When they come in to inspect your facility, all they ask for is the documentation you have and that’s the end of it. They don’t go back through a year and check for a miss. They only check for recent history. If you haven’t done it for a month or two, they’ll assume that you’ve never done it.”

Author: Tim Albrecht
Associate Editor, Ethanol Producer Magazine