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| Idaho's AirEnforcement Program
 **Office of InspectorGeneral**
****AuditReport********
**Air****Idaho's AirEnforcement Program****E1GAF8-10-0018-8100249****Agency'sResponse** 

**STATE OFIDAHO**

**OFFICE OF THE ATTORNEYGENERAL**

**ALAN G. LANCE**

March 5, 1998

Ron Beeler
Division Inspector General for Audits
U. S . EPA Office of lnspector General
Western Audit Division
75 Hawthorne St., 19th Floor
Mail Code 1-1
San Francisco, CA 94105-3901

Dear Mr. Beeler:

Per your request, this letter is written to confirm that the Idaho Division of Environmental Quality (IDEQ) does intend to withhold certain attorney client privileged documents from the audit the U.S. Environmental Protection Agency, Office of Inspector General intends to conduct of IDEQ's air quality programs. Attorney client privileged documents are exempt from disclosure under Rule 502 of the Idaho Rules of Evidence and the Idaho Public Records Act, Idaho Code Section 9-340(l). Neither IDEQ nor the Attorney General's Office are necessarily concerned that the I.G.'s office view such documents; however, once released, arguably the attorney client privilege has been waived and any third party may obtain the documents. Obviously, this coulddetrimentally effect an enforcement action.

For example, IDEQ is presently pursing an enforcement action against Penford Products. In addition a notice of tort claim has been filed against the State of Idaho by residents living adjacent to Penford's facIty, and a 60 day notice of intent to sue under the Clean Air Act has been issued against Penford. Certainly, it would be extremely disadvantageous for IDEQ to be forced to reveal its attorney cfient privileged documents to the parties, especially thosecontaining analysis of the strengths and weaknesses of the various matters at issue

 In most cases, there probably won't be many attorney client privileged documents to withhold. However, in cases where a Notice of Violation is issued. IDEQ submits to the Attorney General's Office a document entitled Compliance Action Referral. This document provides a narrative summary of the violations listed in the NOV and additional background information. Further, it provides the Attorney General's Office with a factual chronology of sig ficant facility events. Although the I.G.'s office could probably construct the chronology information upon review of the file, IDEQ may be able to separate this information from the Referral document andrelease it to the I.G.'s office.

Please be assured that IDEQ and the Attorney General's Office desire to cooperate as fully as possible in the audit process. Please do not hesitate to ask questions such as why certain actions were or were not taken. We will make every attempt to give you a full and complete picture of each matter at issue. If you have any questions regarding this letter, please do not hesitate to contact me or Doug Conde, Supervisor of Deputy Attorneys General assigned to IDEQ, at (208)373-0494.

Sincerely,

  

 Lisa J.Kronberg

 Deputy AttorneyGeneral

LJK/lvh

cc. Wallace N. Cory

 Charles Resis

**UNITED STATES ENVIRONMENTAL PROTECTIONAGENCY**

**REGION 10**

1200 Sixth Avenue

Seattle, Washington 98101

Reply To Attn Of. **OAQ- 107**

**MEMORANDUM**

SUBJECT: Region 10 Response to Draft Reporton Idaho's Air Enforcement Program,

 Draft Report No. E I GAF8-10-0018

FROM: Chuck Clarke

        Regional Administrator        
 EPA Region 10

TO: Truman R. Beeler

        Divisional Inspector General for Audits        
 Western Audit Division

This is response to your July 31, 1998, memo to me and its attached Draft Report. As requested, we are providing a separate statement with respect to each recommendation. As regards your request for a separate statement of concurrence or nonconcurrence with the facts presented in each finding, to the best of our knowledge the facts reported are accurate. We have not, however, mounted our own audit of all of the facts to be able to absolutely confirm every one. However, we believe the facts and the findings are generally consistent with our experiences involving the Idaho Air Enforcement Program. There are, though, a few instances in the following response where we have expanded on the context or have a differing view onthe findings.

In your memo you asked us to "consolidate DEQ's responses with those of theRegion." The State's responses are enclosed herewith; however, since we did not receive the State's response until mid-day today, we were unable to do anything further with it and stillmeet your deadline.

Before I get to the specific responses to your findings and recommendations, I want to provide you some background on activities we started working on with all four Region 10 States -- even before the Idaho audit began -- which should have a significant impact on enforcement in all of our media programs. I am enclosing copies of two documents: 1) a letter we sent 2/18/98 to each Deputy Director of the State Environmental Agencies in Region 10 confirming a framework which had been negotiated and agreed to by the Agency Directors for a process to identify and resolve issues related to enforcement in State programs; and 2) a memo we sent 2/18/98 which memorializes an agreement by the four Region 10 States and EPA Region 10 on a set of principles governing State program evaluations, including identification of broad areas of enforcement program expectations. We believe theseprocesses and agreements, along with 

***Printed onRecycled Paper***

61the audit findings, will provide strong support in our efforts to improve Idaho's enforcement program and, particularly, to develop a new and strengthened Compliance AssuranceAgreement.

I also want you to know that EPA Region 10 has already taken a number of actions in the last several weeks to begin addressing some of the major deficiencies identified in this audit. This has included frank and open discussions at the highest levels of management in both agencies to jointly work through steps to improve DEQ's Air enforcement program; and, the convening of an ad hoc EPA task force which is reviewing cases examined by the audit and determining what types of action are needed on an expedited basis to appropriately address existing SV problems. We will shortly be taking enforcement action on a number of these cases. In addition, I am pleased to report that DEQ has begun to make significant progress with several cases on which there had previously been little apparentaction.

Our hope and intent is to work cooperatively with Idaho to secure the necessary program improvements. However, we will not hesitate to exercise our Federal authoritiesshould that be necessary to get results.

**Chapter 2 Findings andRecommendations**

Findings

There are several places (particularly pages 13,14, and 16) where the State is quoted as saying in effect that they assumed EPA was satisfied with the existing Compliance Assurance Agreement, with the State's support of compliance assistance instead of enforcement, and with the level of State penalty collection. We do not agree that those assumptions reflect the full situation. There have been innumerable in person and telephone conversations -- involving staff and management of both agencies -- of the most direct nature in which EPA expressed its dissatisfaction with the situation. In addition, the monthly Significant Violator (SV) calls inevitably involved EPA pressure for more aggressive State performance, but with only grudging progress occurring. EPA staff who negotiated the existingCompliance Assurance Agreement were told that it was "politically infeasible" for DEQ to include any stronger language in the agreement and said that, while they would work toward EPA objectives, they could not formally commit to them. The advent of Performance Partnership Agreements has also created a context in which there is little guidance for how much leeway a State has in conducting its unique compliance and enforcement program. Now that we have the rather complete picture provided by the audit results, we are prepared to takethe necessary actions to remedy the situation.

Recommendation 2-1

Require DEQ to develop and implement enforcement policies and procedures whichare consistent with EPA's *Compliance and Enforcement Manual, Timely andAppropriate Enforcement Response to Significant Violators, and Clean Air Act Stationary Source CivilPenalty Policy.*

EPA Response

**Concur, with comment.**Early in FY99 we will begin negotiations with Idaho DEQ to substantially revise the State-EPA Compliance Assurance Agreement. While we do not have the unilateral authority to require that DEQ strictly and formally adhere to our compliance and enforcement policies and procedures, it will be a major goal that this agreement reflects them as well as possible and, in any event, we will expect future State performance and outcomes to reflect that. Should the State fail to secure results that are in line with EPA expectations, we will take whatever actions are necessary -- including carrying out independent inspections and assuming responsibility for enforcement actions -- to ensure that there is an adequate Airenforcement program in Idaho.

**Chapter 3 Findings andRecommendations**

Recommendation 3-1

Assess the level of inspection resources available to DEQ and negotiate with DEQ to inspect major and potential sources in accordance with EPA's Inspection Frequency guidance. In the event it is determined that DEQ cannot meet EPA's guidance, the Region should assess DEQ's criteria for selecting sources for inspection, including determining that the criteria do, in fact, result in the most high risk (for noncompliance) sources being inspectedannually.

EPA Response

**Concur, with comment.**During the fall of 1998 we will establish with the State the numbers of inspections to be accomplished by DEQ during FY99. We are not sure whether the State has sufficient inspector resources assigned for their inspection program to satisfy EPA's Inspection Frequency Guidance. We will, however, assess the State's selection criteria andencourage them to better target high risk sources.

Recommendation 3-2

Supplement DEQ's inspection resources with Regional staff if DEQ is unable to meetEPA's Inspection Frequency Guidance.

EPA Response

**Concur, with comment.**We will work closely with the State during the next few months on inspection targeting to ensure that the collective (i.e., Federal + State) set of inspection targets is optimized and will review their inspection plan for FY99 with the guidance in mind. Our ability to supplement State efforts beyond the amount we already do will be contingent on the need for such resources -- and their availability -- when we make an assessment in FY99 of the State's follow through and success in achieving the goals of theguidance.

Recommendation 3-3

Ensure that DEQ implements adequate procedures to ensure timely finalization ofinspection reports.

EPA Response

Concur, with comment. We will work with the State to establish such procedures duringrevision of the Compliance Assurance Agreement in FY99.

**Chapter 4 Findings andRecommendations**

Recommendation 4-1

Ensure that DEQ performs its review of stack test and CEMSreports timely.

EPA Response

**Concur, with comment.**This is an important objective to work toward, and we will make it a priority as we renegotiate the Compliance Assurance Agreement. We believe this situation will improve when DEQ applies the additional resources it is reported to havereceived to address this backlog of tests and reports.

**Chapter 5 Findings andRecommendations**

Recommendation 5-1

Ensure that violations on the SV list meet EPA's SVdefinition.

EPA Response

**Concur, with comment.**We have made this a continuing issue in our monthly, detailed SV calls with the State. As the audit demonstrates, discrepancies can creep in. This is aconcern for us and we will give it renewed attention in our monthly calls.

Recommendation 5-2

Ensure that staff from both DEQ and the Region are aware of, and consistently use.,EPA's SV definition and criteria for the SV Day 0, addressed, and resolved dates.

EPA Response

**Concur, with comment.**We believe most State and Regional staff are aware of these definitions and criteria, but that the reality of implementing them is a continuing struggle. Part of this is the nature of compliance and enforcement work, where there is often missing or incomplete information that can take some time to procure. Timelines are also sometimes difficult to meet because EPA staff must often negotiate with State staff to persuade them to follow a particular course of action consistent with our requirements, policies, or guidance. Also, there is the issue of inadequate resources to move along actions so that they are always within the boundaries of EPA policy and guidance. However, both State and EPA staff can clearly improve their performance, and we will make this a high priority in thefuture.

Recommendation 5-3

Ensure that SVs are deleted from the SV list for appropriatereasons.

EPA Response

**Concur, with comment.**Again, we have continually raised such issues in our monthly SV calls with State staff. We will continue to monitor the situation and promptly addressdeviations which we discover.

Chapter 6 Findings and Recommendations

 Recommendation 6-1

Revise the Compliance Assurance Agreement with DEQ to include EPA enforcement guidance as criteria for assessment of1he State's stationary air enforcementprogram.

EPA Response

Concur, with comment. As mentioned above, this goal will be the highest priority in ourCompliance Assurance Agreement renegotiations.

Recommendation 6-2

Conduct, at least annually, evaluations of the State's air enforcement program for SVsfor consistency with EPA guidance.

EPA Response

Concur, with comment. By the end of 1999 we will conduct a review and assessment of the State's air enforcement program to determine its consistency with EPA guidance. We willalso make a determination at that time as to the feasibility of doing this annually.

Recommendation 6-3

Develop and implement a plan to ensure that EPA enforcement actions taken inresponse to SVs are ***consistent with*EPA**enforcement guidance. Also, ensure that justifications for mitigated penalties meet EPA Penalty Policy criteria and are adequatelydocumented.

EPA Response

**Concur, with comment.**We believe that EPA failure to always ensure that enforcement actions taken in response to SVs are consistent with our guidance is primarily a resource dependent problem. We generally agree that SVs are violators which EPA believes are environmentally most important, but this is tempered by the fact that we are trying to balance SV priorities among four States and are not able to give all SVs in a particular state our highest attention. In any case, we will develop a plan during the coming year to figure out how best to achieve consistency with our enforcement guidance. In addition, EPA Air Program staff have had discussions with our Office of Regional Counsel to reinforce the needfor adequate documentation of the justifications for any mitigated penalties.

Recommendation 6-4

Report the weaknesses in the State's stationary air enforcement program for SVs as a management control deficiency in the next annual FMFIA assurance letter to the EPAAdministrator.

EPA Response

**Concur, with comment.**We will report on any remaining State air enforcement programdeficiencies in the next annual FMFIA letter.

Recommendation 6-5

Withhold final approval of the State's Title V program until the State establishes policies and procedures for enforcement which are consistent with EPA's enforcement guidance. Specifically, the Region should assess Idaho's Title V program against the criteria for an approvable program under 40CFR Part 70.

EPA Response

**Concur, with comment.**While it is unclear whether we can withhold approval of the State's Title V program solely on the basis of the State not adhering to all of EPA's enforcement guidance, we will make such approval contingent on negotiation of a revised Compliance Assurance Agreement which is satisfactory to EPA and which is aligned with these compliance and enforcementobjectives.

Recommendation 6-6

Assume responsibility for enforcement of the stationary source air enforcement program in the State for major and synthetic minor sources if the State is unable to implement an enforcement programthat is consistent with EPA guidance and the Clean Air Act.

EPA Response

**Concur, with comment.**We recognize this as a legitimate approach if the State is unable or unwilling to implement an enforcement program consistent with EPA objectives. Given that the State needs to remedy a number of serious deficiencies (many of which have become institutionalized over a period of years), we expect that it could be several months before such revisions are fully negotiated and become integrated into DEQ's program implementation -and follow through. Thus, we will refrain from making a decision to assume responsibility from the State until DEQ has had an adequate period in which to demonstrate whether it can deliver acceptableperformance.

Enclosures: Idaho Response

 EPA letter to States, 2/18/98

 EPA memo to HQ, 7/9/98

c: Wallace Cory, Administrator,IDEQ

Anita Frankel, Director, Office of AirQuality

Gil Haselberger, Manager, Air Enforcement andProgram Support, EPA R 10

**STATE OFIDAHO**

**DIVISION OF**

**ENVIRONMENTALQUALITY**

**1410 North Hilton, Boise, ID 83706-1255, (208) 373-0502 Philip E. Batt,Governor**

August 31, 1998

Transmitted by facsimile transmission to(206) 553-4038 and via Certified Mail

**CERTIFIED MAIL # P 102113 968**

**RETURN RECEIPTREQUESTED**

Charles Reisig

United States Environmental ProtectionAgency

Office of the Inspector General, WesternDivision

1200 Sixth Avenue

Seattle, Washington98101-3123

Re: Response to OIG draft auditreport.

Dear Mr. Resig:

The Idaho Division of EnvironmentalQuality (DEQ) has completed its review of the Draft Report on Idaho's AirEnforcement Prop-ram dated July 31, 1998. Unfortunately, the report continues to imply wrongdoing on the part of DEQ in the execution of its duties. To the contrary, we steadfastly maintain that our programs have performed according to established agreements and in a manner protective of public health and the environment at all times. The data show, in fact, that all of Idaho's airsheds currently meet air quality health standards, the sole exception being one which remains under USEPA jurisdiction. This overall improvement in air quality can be attributed to the effectiveness of the permitting and enforcement programs operated by DEQ. Today, while in the midst of anexpanding economy and population, we are extremely proud of these results.

The report continues to inappropriately emphasize differences in DEQ's administration and implementation of its program when compared to a preestablished set of national criteria that DEQ had never agreed to strictly comply with. The specifics of this argument were previously addressed in our letter to you dated July 6. 1998. While each individual criticism in the report could be soundly argued on its own merit, we have elected to forsake doing so at this time. This approach would likely be unproductive, since the fundamental argument centers on the need for DEQ to fully comply with national policy and guidance as opposed to the numerous agreements we had entered into in good faith with USEPA. It remains our understanding that these agreements contain the standards for which DEQ should be held to when evaluated for any purpose. These agreements, your office has maintained, were in effect invalid since they did not consistently prescribe the terms and conditions brought forth in national policy. This in itself is hard for DEQ to fathom, since the very agreements in question stem from national policy, and were prompted and openly negotiated with our federal counterparts at USEPA. To be vilified in a national audit for largely complying with the terms of such agreements is a considerable injustice. DEQ's trust in ongoing and future agreements will be significantly compromised if such an injustice is allowed to occur. We assume thiswill not be the case.

The audit report, by-and-large, condemns DEQ's performance. Since performance must be evaluated on a predetermined set of criteria, DEQ maintains to have performed remark-ably well when appropriately evaluated. Strict adherence to national policy as opposed to the operating principles DEQ has agreed to operate its programs under in no way points to poor performance or ineffectiveness in meeting ourgoals.

As our previous response had indicated, we will work with USEPA in the coming year in an open and cooperative manner to resolve perceived deficiencies in our program. It is critical, however, that through this process USEPA recognize the differences in state policies and.in the direction and manner our agency may respond. Equally important, regardless of the outcome of any negotiations, will be recognition that any actions we commit to take we do so with the mutual goal of protecting public health and the environment at anycost.

Due to the fundamental arguments previously raised in this correspondence, DEQ rejects outright the conclusions and recommendations brought forth in the draft report. We seek a retraction of all portions of the report critical of DEQ for anything other than what was understood by this agency to be legally binding and approved operating guidance. Only in doing so can your office accurately represent the performance and efficiencies of DEQ's programs. Release of the report in its present state will serve no purpose but to undermine the good intentions andsuccesses we have realized.

In closing, we welcome continuing discussions on the valid issues you have raised in your report. We remain committed to working with our partners at USEPA to determine and resolve those matters which are of truly great importance to the effective operation of our programs in meeting our commongoals.

Sincerely,

David J. Pisarski

Chief

Compliance AssuranceBureau

Idaho Division of EnvironmentalQuality

DJP/sd c:\...\dave\audit2.rsp

cc: W. Cory

 0. Green

 Gil Haselberger, (Via fax at: (206)553-0110 or (206) 553-0404)

 T. Trumbull

 L. Kronberg

 A. Frankel, USEPA

 COF

 

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