OFFICE OF INSPECTOR GEN ERAL

Catalyst for Improving the Environmen t 

## Evaluation Report



# EPA Can Improve Emissions Factors Development and Management

Report No. 2006-P-00017 March 22, 2006Report Contributors: Patrick Milligan Frank Martinsky Kevin Good Bill Nelson

Abbreviatio ns CAFO Concentrated Ani m al Feeding Operation CO Carbon Monoxide EFPAG Em issions Factors and Policy Applications Group (within EP A) EPA Environm ental Protection Agency FIRE Factor Inform ation Retrieval FMFIA Federal Man a gers’ F i nan cial Integrity Act GAO Governm entAccountability Office kg kilogram s MACT Maxim um Achievable Control Technology NEI National Em issions Inventory PEI Probabilistic Em issions Inventory NO X Nitrogen Oxides OAQPS Office of Air Quality Planning and Standards OIG Office of Inspector General PM 2. 5 Fine Particu late Matter VOC Volatile Organic Com poundU.S. Environmental Protection Agency 2006-P-00017 Office of Inspector General March 22, 2006 

# At a G l a n c e

Catalyst for Improving the Environmen t
Wh yWe Di d This Review We sought to determ ine whether the air em issions factors used by the Environm ental Protection Agency(EPA ) are of acceptable qu alityfor m aki ng keyenvironm ental decisions, and whether EPA’ s process for developing, im proving, and rating emissions factors is sufficient to m e et users’ needs. Backgroun d
Em issions factors are broad esti mates of th e em issions generated from a source, such as a factory

. Nationally , em issions factors are used for about 80 percent of em issions reporting. An em issions factor is a rep r esentative value that attem pts to relat e the quantit y of a pollutant released with an activity rate associat ed wi th the release. Em issions factors underlie manyenvironmental decisions. Recently , States and industr y have been developing emissions factors and subm itting them to EPA.
For further information, contact our O ffice of Congressional and P ublic Liaison at (202) 566- 23 91. To v i e wt h e fu ll report, click on the fo llo w i ng li nk: www .e pa.go v / o ig/reports/2006 /2006 03 22-2 00 6-P-00 017.pdf 

## EPA Can Improve Emissions Factors Development and Management
What We Found EPA has m a d e progress in em issions factors development since our review of the program in 1996, but a large num ber of factors continue to be rated low. The num ber of EPA-rated facto rs increased by nearly 94 percent, fro m 8,838 in 1996 to 17,110 in 2004. However, the percentage of em ission s factors rated below average or poor increased fro m 56 percent in 1996 to 62 percent in 2004.
Em issions factors, intended for use in de ve loping em issions invent ories, have been inappropriate ly used for ke y environm ental decisions beyond their i ntended use. For exam ple, em issions factors have been used for non-inventory purposes, such as setting perm it lim its and reporting the level of air pollution control at specific facilities. For three industr y sectors EPA exam ined, inappropriate use of em issi ons factors contributed to m o re than one m illion tons of pollutants not being controlle d. Demand for emissions fact ors is increasi ng, and will c ontinue for a broad array of environm ental decisions, including m easuring and reporting environmental progress. This pertains not onlyto existing factors but to those that still need to be developed, especiallyem issions factors for sources of fine particulate m atter. If EPA can im p r ove the quali ty of its factors, this shoul d im prove environm ental decision-m ak ing for reducing air polluti on. Im proving the qualit y of em issions factors is an extrem elychallenging task that maytake EPA y ears to address. The qualityof manyem issions factors rem a ins low i npart because EPA did not have a sufficient process for developing, i m proving, and rating em i ssions factors, nor di d EPA have a co m p rehensive strategic plan. We found i n consistent em issions factors guidance, continuing r e liance on a qualitative rating s y stem when a quantitative range of unc ertaintyis ne eded, and ins ufficient program funding when needs are increasing.

What We Recommend
We are making a num ber of reco mmendations to EPA to, am ong other things, develop em issions factors guidance that addresses the developm entand appropriate use of em issi ons factors for non-inventory purposes; establish a rat ing s y stem th at provides the quantitative r ange of uncertaint yfor em i ssions factors for both inventor y and non-i nventor y purposes; work with industry , State and local agencies, and others to leverage avail able resources for meeting increasing demands for new factors; and establish a workgroup to develop a com prehensive strategic plan for th e E m issions Factors Program , and ensure that requested resources ar e used to achieve program goals. In respons e to the draft report, the Agencystated that our reco mmendations generally align with i t s current im provement efforts.UNITE D STATES ENVIRONMENTAL P R OTE CTION AGENCY WASHINGTON, D.C. 20460

OFFI CE OF INSPECTOR GEN ERAL March 22, 2006
MEMORANDUM
SUBJECT: EPA Can I mprove Em issions Factors Developm ent and Managem ent Report No. 2006-P-00017
FROM: J. Rick Beusse /s/ Director for Program Evaluation, Air Issues
TO: W illiam L. W e hrum Acting Assistant Adm inistrator for Air and Radiation

This m e m o r andum transm its the results of an Office of Inspector General (OIG) evaluation of em issions factors developm ent and m anage m e nt

. Th is report contains findings that describe how the U.S. Environm ental Protection A g ency (EPA ) can im prove em issions factors developm ent and m anage m e nt, as well as corrective actions th e OIG recommends. This report represents the opinion of the OIG and the findings contain ed in this report d o not necessarily rep resent the final EPA positio n. Final determ inations on m atters in the repo rt will be m a de by EPA managers in accordan ce with established procedures. Action Required
In acco rdan ce with EPA Manual 275 0, as the acti on official, you are requ ired to provide a written response within 90 days of the final report date. The response should address all recomm endations. For the correctiv e actions planned but not com pleted by the response date, please describe the actions that are ongoing and provide a tim e table for com pletion. Wh ere you disagree with a recommendation, please provide alternative actions for addressing the findings reported. We appreciate the efforts of EPA officials and staff in working with us to develop this report. If you or your staff have any questi ons regarding this report, pl ease contact m e at 919-541-5747 or Pat Milligan at 215-814-2326.

# Table of Contents

At a Glance 

## Chapters

1 	 Introduction ........................................................................................................... 1 Purpose .......................................................................................................... 1 Background .................................................................................................... 1 Scope and Methodology................................................................................. 6 2 	 Use of Unreliable Emissions Factors Adversely Impacts Key Environmental Decisions ............................................................................. 8 EPA Rated More Factors But Quality of Many Factors Remains Low ........... 8 Misuse of Emissions Factors Resulted in Significant Unidentified and Uncontrolled Emissions........................................................................ 10 Increasing Demand for New Emissions Factors Illustrates Continued Importance of Emissions Factors Program .......................................... 13 Conclusion...................................................................................................... 14 3 	 EPA’s Management of Emissions Factors Program Needs Improvement ...... 15 Conflicting Guidance Issued for Emissions Factors ....................................... 15 Rating System Does Not Define Appropriate Uses........................................ 17 Inadequate Funding Provided and Used........................................................ 19 Recent EPA Efforts Made to Revamp Emissions Factors Program............... 21 Comprehensive Plan Needed to Improve Data Collection and Set Priorities ......................................................................................... 22 Conclusions.................................................................................................... 24 Recommendations ......................................................................................... 25 Agency Comments and OIG Evaluation......................................................... 26 

## Appendices
A Details on Scope and Methodology ..................................................................... 28 B Details on Concentrated Animal Feeding Operations Air Emissions .............. 31 C Agency Response to Draft Report ....................................................................... 32 D OIG Evaluation of Agency Response .................................................................. 35 E Distribution ........................................................................................................... 37

# Chapter 1 Introduction Purpose Quantifying air em issions is a vital aspect of air pollution program s
. Regulatory authorities and others use em issions values in: (1) developing em issions inventories, (2 ) identifying and evaluating control strategies, (3) determ ining applicability of permit and regulatory requirem e nts, and (4) assessin g risks. Em issions facto rs are broad estim ates of the em issions generated from a source, such as a factory. These factors are the m o st commonly used estim ate for establishing em ission values, and are used nationally for about 80 percent of emissions reporting. The Environm ental Protection Agency (EPA) has long recognized the im portance of e m issions factors, particularly for developing em issions invento ries. Over the last 10 years, p e rm itting authorities, so urce owners and operators, and a few Agency program s have begun using em issions factors for purposes other than generating a national em issions inventory. For exam ple, em issions factors h ave been used to develop em issions contro l strategies, determ ine applicability of perm itting and regulatory requirem ents, estab lish perm it lim its, ascertain the effects of sources, an d develop em issions reduction strategies. Therefore, the im pact of the quality of the factors is far greater than it would be if they were used only for the inventory. Becau se em issions factors und erlie so m any environm ental decisions, the objectiv es of our evaluation were to determ ine whether:

x Em issions factors are of an accep tab le quality fo r use in key environm ental decisions m a de by EPA and State and local agencies; an d

x The Agency’s process for developing, im proving, and rating em issions factors is sufficient to m eet key users’ needs. 

### Background In the 1960’s and early 1970’s, em issions estim ation m e thods cam e about due to the need to estim ate air pollution em issions. EPA first developed em issions factors from source test data used to develop new em issions standards in the 1970’s. At that tim e, factors were m ostly used to develop em issions inventories. In the 1980’s and 1990’s, EPA expenditures on source testing declined, yet during the sam e tim e period the dem and for em issions data expanded as em issions factors w e re in creasin gly used for

1non-inventory decisions. As noted in our prior report, EPA’s em issions factor program resources were surpassed by the need for m o re and im proved em issions data. 1 Recently, EPA reorganized th e Agency’s em issions factors program in an effort to address this ch allen ge. What Are the Ways of Obtaining Air Emissions Information? Generally, air em issions inform ation can be obtained through direct m easures of em issions or by estim ating em issions. Under ideal circum stances, all em issions data us ers would derive values f r om ongoing em issions testing, continuous em issions m onitoring, or frequent calcu lation using well-accepted engineering p r in ciples. However, th ese m e thods are tim e and resource inte nsive. Continuous Em issions Monitoring and Source Testing represent ways to directly m easure em issions, while the others involve estim ating. The five basic m e ans of obtaining em issions inform ation are discussed below.

x Continuous Emissions Monitoring: This involves continuously m easuring pollutants em itted into the atm osphere from a single source, such as a sm okestack, by placing a m onitor at the source. This is one of the m o st reliable m e thods for m easuring em issions, but has annual costs ranging from about $10,000 to $50,000 and is only required at the largest sources of air pollution.

x Source Testing: Like C ontinuous E m issions Monitoring, source testing data are generated by placing a m onitor at a source, but in this case only m easures for a lim ited num ber of hours. The facility uses the m onitoring data to calculate an annual em issions total. This is also generally more reliable than em issions factors but has annual costs of $20,000 for conducting a test every 5 years. While som e facilities are required to periodically conduct source tests, m any are not.

x Material B a lance: For som e sources with Volatile Organic Com pound ( VOC) e m issions, m aterial balance (also known as m a ss balance) assum es that a percentage of the materials used in a process will evaporate to becom e air em issions. Therefore, the am ount of e m issions resulting from evaporation is based on the am ount of e v aporative m aterial used. Recordkeeping to calculate m aterial balance costs about $2,000 to $10,000 per year, per process.

x Emissions Calculating Tools: These estim ating m e thods represent a more advan ced and complicated use of e m issions

Emissi on Factor Development, EPA Office o f In specto r Gen eral (OIG) Re p o rt No. 6 1003 06 , Sep tem b e r 30, 1996.

2 1factors and other data, and include models, databases, and other pollutant estim ating software.

x Emissions Factors: Anem issions factor relates the em issions am ount of a pollutant with an activity rate associated with its release. Emissions facto rs are essentially averag es of availab le data from various sources, such as source tests. T h e cost for using an em issions factor depends on the tim e to locate the appropriate factor. The ability to rapidly locate em issions factors m akes this one of the least expensive m e thods for estim ating em issions. The general equation for em issions estim ates is: Activity Ra te x Emissions Factor = Emissions The following exam ple illus trates o n e way that an em issions factor is used. Burning distillate oil in industrial boilers produces carbon monoxide (CO) and other em issions. The CO e m issions factor for this pro cess is 0.6 kilo gram s (kg) of CO em itted per 1,000 liters of oil burned. Assum ing the boiler burns 90,000 liters of oil per day, the following calculation show s the estim ated amount of CO em itted per day:

90,000 liters per day x 0.6 kg CO/1,000 liters = 54 kg of CO/day In the absen ce of direct m easures, em issions factors are freq uently used as a quick, low cost way to estim ate e m issions. How Are Emissions Factors Developed?
EPA’s Em issions Factors and Policy Applications Group (EFPAG) oversees the Em issions Factors Program

. EFPAG is part of the Office of Air Quality Planning and Standards (OAQPS) within EPA’s Office of Air and Radiation. EPA issues the guidance for developing the factors, and initially was responsible for developing m any of the factors. However, industry and States incr easingly have been developing em issions factors and subm itting them to EPA for inclusion in AP-42. 2 EPA guidance states that the followin g five steps are to b e carried out to develop em issions factors:
1. Data Collection - For a particular industry secto r, EPA collects inform ation related to facility process descriptions and source em issions test data, if known to exist and available. Sources of this inform ation include existing data in EPA databases and

The Compilati on ofAir Po llutant Emission Factors , c o mm only refe rre d t o as the “ A P

- 42 se ries” of em issions fact ors , is t h e prim ary guidan ce an d s ource of rated em issions factors use d by EPA.

3 2extern al req uests to Fed eral, S t ate, and local agencies and in dustry trade o r ganization s. 2. Data Evaluation - The data are evaluated to d e term ine which data should be used to develop the em issions factor. The data selected are known as “test data” and are given test quality ratings.
3. Data Classification - The data are then grouped into clusters of sim ilar processes, whichwill eventu ally be averaged into an em issions factor.
4. Data Calculation - EPA averages the groups and develops a num erical em issions factor. Th e factor is given an overall qualitative rating of “A” (excellent) through “E” (poor) based on the ratings assigned to the test data and production quality.
5. Published Emissions Factor - The group of processes represented by the em issions factor is assigned an existing or new source classificatio n code, and the em issions factor is published in AP-42. How Are Emissions Factors Used?
Em issions factors are used to develop the em issions data that are th e cornerstone of a host of important environm ental decisions made by EPA; State, local, and Tribal agencies; industries; environm ental groups; and others. These decisions include facility perm ittin g, development of control strategies, and com pliance and enforcement decision s. Accordin g to a 2001 Governm ent Accountability Office (GAO) report, 3 EPA’s data show that, nationally, em issions factor s are used for about 80 percent of em issions determ inations. Em issions f actors data are also used to m easure environm ental progress and dem onstrate program results under the Governm entPerform anc e and Results Act of 1993. 4 Table 1.1 provides som e of the key uses of em issions factors.

3 Ap r il 2 001 GA O Repo rt , EPA Shoul d Improve Oversight of Emission s Reporting by Large Facilities ( GA O -0 1- 46) 4TheGovernm ent Pe rform ance and Res u lts Act ho lds Fe de ral age n cies ac countable for measuring program outcom e s and reporting result s annually to Congress and the public.

4Table 1.1: Ke yUses of E m issions Fa ctors Emissions Factors Use s Des cription Determ inin g Source Cla ssification EPA classifies a facility to be a minor or major source by determi ning t he facility’s potential to emit; this impact s the level of air pollution control equi pment nee de d. Establishing and Enforci ng Perm it Lim its Based on emi ssi ons measures or estimat es, EPA and States set emission s lim its via operati ng permits. Perm it Fees Usi ng the emi ssi on s estima tes, States ca lculate a nnu a l fees a facility must pay for the emissi ons released. Issui ng Ma xi m u m Achie vable Control Tech nolo gy S t andards EPA writes st andards requi ring maj or sources of hazardous ai r pollutant s to install the be st control te ch nology availa ble for an indu stry se ctor. Plant-wi de Applicability Lim it and Em issi on s Tradi ng Both of these regulato ry ap proa ch es m e asu r e emi s si ons fro m a more h o listi c viewpoi nt. F o r plant -wi de appli cability limits, some point so urce s that increa se in emissi on s are offset by corre sp ondin g decrea s e s from othe r poi nt source s at the same facility. This same type of offsetting met hod is used when facilities trade emissi ons credits to other facilities emitt ing over the limit. Measuri ng Environm ental Progress The amo unt of emission s redu ce d rem ains a key measure of environ menta l prog re ss. O ne of the most important da tabases for tracking the amount or emissions reduced is EPA’s National Emissi on s Inventory (NEI).
Em issions factors play a pivotal role in m any decisions, especially in m easuring environm ental progress. For exam ple, every 3 years, EPA prepares a national database of air em issions inform ation – the NEI – based on emissions factors and other input from States, industry, and other stakeholders. This inventory depends heavily on em issions factors for stationary sources (such as factories) and m obile sources (such as trucks and autom obiles). The NEI database contains inform ation on sources that em it criteria air po llutants (six comm on air pollutants that harm hum an health and the environm ent for which specific standards are set), as well as hazardous air pollutants, also known as air toxics. Key uses of the inventory include:

x Conducting air dispersion m odeling and analysis;
x Developing control strategies to redu ce pollution levels;
x Issuing air regulations;
x Perform ing risk assessm ents;
x Screening s ources for com p liance investig ation s;
x Tracking short- and long-term trends in em issions; and
x Measuring program results in EPA’s annual perform ance plan. When an area of the country does not m eet the National Am bient Air Quality Stan dards, EPA and the States gather inf orm ation about the

5em issions rates of various sources in that area (often deriv ed from em issions factors) to target im portant sources for control. Through its annual Trends Report , E P A uses the em issions inventory data to gauge progress in m eeting its goals of redu cing air pollution. Em issions factors play a key role in assessing such annual progress. How Are Emissions Factors Maintained and Accessed? In the AP-42 series of em issions factors, EPA assigns a qualitative rating to the em issions factor based on the quantity and quality of the data used to develop the factor. T h e AP-42 series is EPA’s recomm ended source o f air po llutant em issions factors for both criteria an d hazardous air po llutant em issions, and contains over 17,000 rated em issions factors for m o re than 200 air pollution source categories. The Factor Inform ation Retriev al (F IRE) Data System is a databas e containing both rated and unrated em issions factors. FIRE contains all AP-42-rated factors, as well as approxim ately 4,400 unrated em issions factors th at EPA recomm ends for use. FIRE also contains a list of source classification codes, and inform ation about industries’ operating system s, processes, and chem icals em itted. FIRE incorpo rates n e w or revised em issions factors from AP-42. The Clearinghouse for Inventories and Em issions Factors is EPA’s electronic repository of the m o st up-to-date inform ation on inventories and em issions factors, including AP -42 and FIRE. The clearinghouse facilitates th e exchange of em issions factors and inform ation on em issions inventories between Federal, S t ate, and local agencies; industry; private citizens; universities; contractors; and foreign governm ents. The clearinghouse also provides historical inventory inform ation and em issions estim ation guidance. 

### Scope a nd Methodolog y To assess th e adequacy of EPA’s Em issions Factors Program, we reviewed docum entation related to AP -42 em issions factors, including: the developm ent and prioritization of e m issions factors, the process used for rating em issions factors, key uses of e m issions factors, and policies and procedures for im plem enting the Em issions Factors P r ogram
. We also conducted interview s with officials from EPA at both the Headquarters and regional levels; officials from s e veral States and an air pollution association, and em issions factors experts. W e conducted our field work from March 2005 to Octo ber 2005, in accordan ce with Government Auditing Standards , issued by the C o m p troller General of the United States.

6As part of our evaluation, we considered th e resu lts of a prior EPA OIG report, Emission Factor Developmen t (Report No. 6100306), dated Septem ber 30, 1996. Additional details on our scope and m e thodology are in Appendix A.

7

# Chapter 2 Use of Unreliable Emissions Factors Adversely Impacts Key Environmental Decisions

EPA has m a de progress in em issions factors developm ent since our 1996 review, primarily in th e increased number of factors receiving ratings on quality. However, the large percentage of low quality factors has not dim inished. EPA officials have identified the inappropriate use of em issions factors for key environm ental decisions, such as perm it lim its and the level of air pollution control equipm ent installed at sp ecific facilities, resulting in the release of significant am ounts of unidentified and uncontrolled em issions. For ex am ple, according to EPA enforcem ent records, three industries – petrol eum refineries, w ood products, and ethanol production – operated with in sufficient co ntrol equip m ent prim arily because em issions lim its were significantly underestim ated due to the em issions factors used. EPA, through separate enforcem ent actions, required companies in these industries to install additional em issions contro ls, resulting in the com bined reduction of o v er one m illion tons of pollutants. Absent EPA intervention through enforcem ent actions or stringent guidance, industries will have little incentiv e to ensure that th e em issions factors used are of known and accep table quality. This pertains not only to existing f actors but to ones that still need to be developed, especially quality factors for sources of fine Particu late Matter. For example, factors will be used by EPA and States to de v e lop fine Particu late Matter control strategies. As EPA continues to m e asure and report progress in reducing harmful air pollutants, it needs to im prove the quality of em is sions factors estim ates. T h is will im prove environm ental decis ion-m aking related to air pollution and hum an health. 

### EPA Rated More Factors But Qualityof ManyFactors Remains Low In our September 1996 OIG report, we noted that em issions factors were unavailable for m any sources of air pollution and, when available, m any were unreliable. This w a s attribut ed to significant funding cuts that m aterially affected EPA’s ability to m eet an increased dem and for quality em issions factors. Table 2.1 shows that, as of March 1996, E P A rated 56 percent of the em issions factors as either below average or poor (24 percent plus 32 percent, respectively). As of Septem ber 2004, that num ber had increased to 62 percent (28 percent plus 34 percent, respectively). EPA based its ratings on test m e thods, quantity of data, and

8whether the facilities tested represented a sufficient random sam p le of the industry.
Table 2.1: Comparis on of Emissions Factors Ra tings (M arch 1996 and Se ptember 2 0 0 4 )

Factor Ratin g Qualitativ e Des cription As of M a rch 1996 As of Sep t e m ber 2004 Number o f

Factors Percen t of Total Number o f Factors Percen t of Total A Excellent 1,270 14% 2,135 12% B Above Avera ge 1,190 13% 1,829 11% C Average 1,513 17% 2,619 15% D Below Avera ge 2,077 24% 4,740 28% E Poor 2,788 32% 5,787 34% Total 8,838 17,110

Our 1996 OIG report em phasized the needfor EPA to invest more resources in the em issions factors program and to develop alternative approaches to factor developm ent by increasing industry and State involvem ent. The Agency did increase its em issions factors efforts, as evidenced by the increased num ber of factors it had rated since the 1996 OIG review. Since March 1996, EPA nearly doubled the number of rated em issions factors, from 8,838 to 17,110. As of Septem ber 2004, 4,409 em issions factors, or about 20 perc ent of the total of 21,519, were still listed as unrated. Overall, the num ber of rated em issions factors has increased, wh ich reflects som e i m provem ent in the quality of em issions factors. For exam ple, e m issions fact ors that previously had a lower rating received a higher rating, and som e factors previously not rated have been rated. Additionally, since our 1996 report the Agency has taken the following steps to im prove the Em issions Factors Program :

x Surveyed em issions factor users, including States and industries, on their em issions facto rs needs.
x Initiated the developm ent of an autom ated database to store test data results for future em issions factors developm ent.
x Worked with an industrial association to develop new e m issions factors.
x Began a pilot project to adjust em issions factors for non-inventory use. An EFPAG pilot project is assessing two industry sectors – hot m i x asphalt plants, and pulp and paper plants. The goal of the pilot is to evaluate the im pact of adjusting excellent- and ab ove averag e-rated em issions factors for uncertainty. E m issions factors are used widely for hot m i x asphalt plants by source owners and regulatory authorities,

9particularly in calculatin g production lim its below thresholds that would trigger aspects of the air operating permits program

. Pulp and paper plants generally rely on em issions factors to calcu late fu gitiv e hazardous air pollutants and VOCs from these plants. In som e instances, these em issions can account for 60 to 80 pe rcent of a site’s em issions. EFPAG’s study found that if em issions factors w e re ad justed to better account for uncertainty, alm ost all of the 3,600 hot m i x asphalt plants in the United S t ates likely would have to recalculate production lim its. As a result, som e plants would be unable to retain their synthetic m i nor source status, thus m aking them subject to the Title V air operating perm its program and, as a result, potentially subject to stricterregulations and State or local air toxics rules. EFPAG also found the use of adjusted em issions factors m ay cause som e revisions to State Im plem e ntation Plan model projections, causing som e plants to reduce em issions below current levels. 

### Misuse of Emissions Factors Resulted in Significant Unidentified and Uncontrolled Emissions To date, EFPAG’s pilot study has identif ied the potential em issions im pact and possible regulatory consequences of using emissions factors to estim ate em issions. There are s e veral instan ces where th e actu al em issions impact from m i suse of e m i ssions factors has been identified, and this im pact has been substantial. For exam ple, we exam i n ed three industries wh ere EPA officials indicated em issions factors w e re not acceptable f o r the decisions being made – petroleum refineries, wood products, and ethanol production. F o r these three large industries, EPA had indicated em issions were significantly und erestim ated du e to the em issions factors used. As a resultof pollutants not being previously identified or controlled, EPA, through separate enforcem ent actions, had required companies to install additional em issions controls, resulting in the reduction of over one m illion tons of pollutants fo r the three in dustries com bined. According to EPA enfor cem ent records, for years the three industries operated with insufficient control equ ipm ent because the em issions lim its in perm its and the annual em issions reported by the individual industry facilities significantly un derstated the actual am ount of em issions released into th e atm osphere. EP A decided to exam ine the reliability o f the em issions factors m easures for each industry sector and, usin g new, m o re accurate m easures, foun d actual em issions to b e much higher. Table 2.2 illus trates em issions reductions, civil penalties, and contro l investm ents by each industry.

10Table 2.2: S u mmar yof Air Violations for Thre e Industries Rela ted to Emissions Factors Us e

Industry Companie s Sites Civil Penalties (millions) Con trol In v estment

(millions) Pollutants Remov ed

(ton s) Petroleum Refineries 57 57 $45.0 $2,600.0 765,00 0 Wood Prod u c ts 5 * 21 $289.0 * $175.0 177,00 0 Ethanol Pro duction 14 91 $6.6 $240.5 116,75 0

Total ** 76 169 $340.6 $3,015.5 1,058,750

* T h is in for ma tion a v ailab le fo r onl yt h ree w o od pr od ucts c o mpa nies. ** These c o m p anies repre sen t a porti on of the indu stry , n o t th e entire i n d u stry . Through consent agreem ents reached with facilities in these sectors, EPA and the States required more stringent perm its and installation of additional pollution controls to lower em issions. EPA staff indicated the problem s noted for these three industr ies regarding poor quality em issions factors are occurring in m any other industries. F o r the three industries, em issions estim ating techniques were im proved as a result of EPA enforcem ent actions. However, correcting such problem s through enforcem ent actions is both costly and tim e-consum ing. Increased scrutiny of the use of emissions facto rs is needed if expected environm ental benefits are to be realized. Details on each of the three industries follow. Petroleum Refineries Air quality problem s in the Houston-Galveston area dem onstrate the serious consequences in term s of co s tand effectiveness of air pollution control strategies related to the petroleum industry. Because EPA declared the Houston-Galveston area in severe noncom pliance with Federal air quality standards for ozone , 5 the m e tropolitan area was required to develop a control strategy to reduce Nitrogen Oxides (NO X ) and VOC e m issions. Based on m o deled ozone predictions using em issions inventory data, Texas devised a strategy to reduce ozone precursor em issions that called for the reduction of NO Xe m i ssions by 90 percent. In August 2000, Texas conducted a com p rehensive research project assessing source contributions to the State’s air quality problem s. Based on the com parison of ambient m easurem ents of VOC conce ntrations to the reported em issions inventory estim ates, the Texa s 2000 Air Quality S tud y found that VOC e m issions from petroleum refineries were significantly under reported in the emissions inventory. This prim arily involved under

Ground-level ozone is not emitted directly into the air, but is created by c h em ical reactio ns betwee n NO X and VOC inthe presenceof heat and sunlight.

11 5reporting of em issions from flares, 6 process vents, and cooling towers, as well as from fugitive em issions (leaks). The under-repo rting was caused largely due to the use of poor quality em issions factors. The quality of one em issions factor was so poor that for short durations, actual em issions from the flaring process could be as much as 50 tim es higher than em issions calculated using the em issions factor. This was because the factor did not account for variables su ch as the co mposition of the fuel being burned and the efficiency of the flaring equipm ent. This em issions factor was developed in the early 1980’s and had not been updated at the tim e of the 2000 Texas review. Texas revised its em issions estim ates based on its 2000 review , using im proved em issions estim ating techniques and new m odeling. The revised estim ates showed that additi onal VOC reductions would be needed to m eet national air quality standards, while required NO Xreductions under the S t ate Im plem e ntation Plan could be eased from 90 to 80 percent. As a result of what happened in Houston-Galveston, the regional planning authority in the Philadelphia area decided to m o re closely study refinery VOC e m issions. The study disclosed m any of the sam e problem s noted for the Houston-Galveston area, and recomm ended that Texas’ guidelines be used when estim ating em issions. The California Bay Area Air Quality Managem ent District also closely exam ined e m issions estim ates, found sim ilar resu lts, and issued a new rule to obtain more accurate em issions estim ates to ultim ately reduce em issions. Wood Products 7 In 1988, EPA began investigating a suspected nationwide pattern of Clean Air Act violations by a prom inent wood products com pany. EPA found that the company had failed to obtain required perm its for new construction and other m odifications at som e of its facilities. The com pany ha d used a poor quality em issions factor for estim ating VOC em issions and, as a resu lt, claim ed it was not sub ject to the p e rm itting requirem ents. This em issions factor underestim ated VOC e m issions because it w a s deriv ed from a test m e thod that su bstantially understated VOC e m issions containing oxygen. The industry subsequently developed a new em issions factor that adequately accounted for VOC e m issions containing oxygen.

6 Flaring is ane ngineering pra ctice that provides fo r process equipm ent to i mmediately release gase s to a device (a flare ) wherethey can be quic k ly and sa fely incine rated. T h e proper useof flaring is a good engineerin g practice because flares can pre vent dam a ges, fires, e xplosi ons , and in juries t o em ployees. 7 Thewood products indust ry sector in cludes m anufactur ers of plyw ood, panelboard, m e dium density fiberboard, and oriented strand board

. Thedrying and pre ss ing proces ses involve d inthis sector area large source of em is sions

.

12EPA used this inform ation as the basis for successfully nego tiating th e largest Clean Air Act civil penalty ever collected by EPA (up to that tim e), and the second largest under any environm ental statute. Und er the term s of a consent decree, the com pany was required to pay $11.1 million in civil penalties and install state-o f-the-art pollution control equipm ent valued at $7 0 m illion. In the 1990’s, EPA reached consent agreem ents with three other wood product com panies after identifying sim ilar violations. In addition to civil penalties, the consent agreem ents instructed the com p anies to install the Best Available Control Technology to reduce VOC e m issions, conduct com pliance audits, and obtain appropriate perm its. Ethanol Production In 2002, based on recent success in the wood products industry, EPA began investigating Clean Air Act violations by ethanol production com panies. These com panies use co rn to m anufacture ethano l for blending with autom obile fuel, and during processing burn off gases that em it VOCs into the atm o sphere. The ethanol em i ssions factor was developed using the same test m e thod as wood products and again underestim ated the am ount of VOCs being em itted into the atm osphere. EPA alleged that these com panies knowingly used a faulty em issions factor for perm itting. In October 2002, EPA announced consent agreements with 12 ethanol plants to install air po llution control equipm ent. EPA estim ated that VOC em issions will b e reduced by 2,400 to 4,000 tons per year an d CO by 2,000 tons p e r year. The settlem ent also will resu lt in estim ated annual reductions of NO Xby 180 tons, Particulate Matter by 450 tons, and hazardous air pollutants by 250 tons. 

### Increasing Demand for New Em issions Factors Illu strates Continued Importance of Emissions Factors Program
As EPA and the States move forwar d with efforts to identify and regulate sources em itting excess levels of ai r pollution, there will be increased dem and for new e m issions factors, especially for sources of fine Particulate Matter (PM 2.5 ). By April 2008, EPA and States will need to identify sources of PM 2. 5 , determ ine the am ount of em issions from these sources, and ensure that sufficient em issions control equip m ent is installed at sources located in non-attainm ent areas. In 1997, EPA established the PM 2. 5 standard and in Decem ber 2004 designated areas as b e ing in nonattainm ent with the standard. In April 2005, these designations becam e e ffective for 208 U.S. counties impacting a total populatio n of 88 m illion people. By April 2008,

13States are required to su bm it a plan that identifies the sources of PM 2. 5 , how m u ch PM 2. 5 each so urce em its, and the actio ns planned for adequately regulating these sources. The quality of e m issions factors will directly im pact the effectiveness of the plans. An i m plementation plan m ust show how an area in nonattainm ent will reduce em issions to m eet the standard s as soon as possible, but no late r than 2015, and include supporting technical an alyses based on em issions factor-developed em issions estim ates. The Concentrated Animal Feeding Operations industry provides another exam ple of an area that currently do es not have f actors but needs them

. Appendix B provides details on EPA’s efforts to address em issions factors in this area. 

### Conclusion Although EPA has m a de progress in emissions factors developm ent since our 1996 review, the need for better qua lity em issions factors has outpaced the Agency’s efforts to improve exis ting factors and develop new ones. EPA’s use of poor quality em issions factors inform ation has ham pered environm ental decisions, resulting in more than o n e m illion to ns of uncontrolled em issions spanning years, and an in creased risk of adverse health effects. This also places a disp roportionate em issions reduction burden on those facilities that use good quality emissions factors. Although our evaluation did not address the cost impacts of rectifying the inappropriate use of em i ssions facto r s, we believ e these costs are substantial to both EPA and the States. For eachof the three industries w e reviewed (petroleum refineries, wood products, and ethanol production), there are, at a m i ni m um, the following costs for addressing each industry: rewriting perm its and determ ining the proper em i ssions lim its, issuing regulations to require increased air pollution controls, and the legal actions (settlem ent or litigation) necessary to ensure ind ustry com plies with th e new regulations. The three in dustries rep resent a v e rysm all portion of the universe of em issions estim ates derived through the use of em issions factors. More effort in exam ining other key em issions factors m ay identify significant am ounts of additional unregulated pollutants. Incom plete or unreliable em issions inform ation can have seri ous consequences in term s of the effectiveness and cost of air po llutio n control strategies. The public will have little confidence ineither the success or equity of EPA’s decisions if those decisions are based on questionable em issions data.

14

# Chapter 3 EPA’s Management of Emissions Factors Program Needs Improvement
EPA did not have a sufficient process for developing, im proving, and rating em issions factors. Wh ile the Agency has taken various steps to im prove the Em issions Factors P r ogram , we noted deficiencies in four key areas that resulted in the use of poor and low quality em issions factors:

x Lack of consistent em issions factors guidance.
x Continued use of a r ating system that only provides subjective inform ation.
x Insufficient funding for the program

. x Not having a clear strategic plan. Given the vast num ber of em issions sources using factors and the differing uses of em is sions factors for m aking significant environm ental decisions, addressing these deficiencies will require a long-term , m u lti-year, coordinated effort am ong EPA, State and local agencies, ind ustry, and others. EPA will need to assert its leadership to ensure that, in the future, em issions factors are only allowed to be used in accordance with yet to be issued EPA guidance on their proper use. In fiscal year 2003, OAQPS began a reevaluation of the Em issions Factors P r ogram to standardize and stream line the em issions data co llection and reporting process, establish procedures for defining data uncertainty and using em issions factors in non-invento ry applicatio ns, and establish an outreach program to communicate changes to em issions factors stakeholders. However, to m ake the needed im provem ents to the Em issions Factors Program , EPA will need in creased focus and direction, includin g fully developed goals and objectives. 

### Conflicting Guidance Issued for Emissions Factors While introductory text to AP-42 st ates that em issions factors m ay be appropriate for situation s such as m aking source-specific em issions estim ates for area-wide em issions inventories, the text does not recomm end em issions factor use except for inventory purposes. However, the text ackn owledges th at em issions factors m ay be used for site-specific purposes as a last resort (em phasis added) provided appropriate caveats concern ing their lim itations are in p l ace. W e noted three occasions where EPA has issued guidance on the use of e m issions factors for sourcespecific purposes that conflicted with the intent of AP-42 e m issions

15x guidance – that is, that emissions factors not be used at individual sources. Caveats on em issions factors use in these program s varied and m ay have resulted in data being used for purposes outside EPA’s intended use of em issions factors. For exam ple: Even though AP-42 specifically states that the use of e m issions factors for site-specific perm it lim its is not recomm ende d, EPA issued air perm it guidance docum e nts approving the use of em issions factors to set perm it lim its at indiv idual facilities. In response to concerns that Title V operating perm its were too costly and burdensom e to im ple m ent, in July 1995, EPA issued guidance, White Paper for Streamlin ed Developmen t of Part 70 Permit Applications , stating that facilities could use em issions factor s estim ates to determ ine em issions lim its in the perm it applications. Sim ilarly, in August 2000, EPA issued draft guidance that provid ed flexibility and allowed State and local p e rm itting agencies to use site-specific em issions factors as well as other relevant em issions factors. EPA eventually rescinded the 2000 guidance but plans to re-introduce parts of it.

x EPA’s New Source Review Program applies to sources undertaking m a jor plant modifications, and involves determ ining the source’s potential to em it. The New Sour ce Review W o rkshop allows the use of AP-42 em issions factors in estimating em issions to determ ine a facility’s po tential to em it. EPA’s flexible perm itting app roach for New Source Review, known as the Plant-wide Applicability Lim itation, provides greater flexib ility by allowing som e e m i ssions points within a facility to increase em issions provided the overall em issions rem ain below the plant-wide lim it. Current rules for perm it lim itations provide wide latitude in allowing the use of e m issions factors.

x EPA allowed the use of em issions factors in a recent reconsideration of a Maximum Achievable Control Technology (MACT) standard, 8 even though AP-42 specifies that emissions factors should not be used for such source-sp ecific purposes. MACT standards specify the em issions control stand ards that m u st be ach iev ed by an affected industry. H o wever, if the em issions factor understates actual em issions, the facility may be required to install controls that do not effectively reduce em issions to an acceptab le lev el; conv ersely, an overstatem ent m ay cause the indu stry to unnecessarily and un fairly be required to install m o re costly controls. In a July 2005 reconsideration of a rule, EPA m a de m o nitoring requirem ents less stringent by allowing the use of e m issions factors. However, alm ost all of the
July 30, 2004 Environm ental Pr otection A g ency, 40 CFR Part 63: [O AR-2003-0048; F RL-XXXX

X][RIN 2060-AM78] National Emission St andards for Hazardous Air Pollutants: Plywood and C o m p osite Wood P r oduct s; Reconsideration of original rule dated July 29, 2005.

16 866 em issions factors EP A allowed for this MACT rulem aking were either unrated or received a rating of poor or below average.EFPAG officials said that the currently planned guidance for noninventory uses of e m issions factors should address the m o re appropriate applications of e m issions factors in th ese programs. 

### Rating Sy stem Does Not Define Appropriate Uses
The current rating system for em issions factors does not provide the user with a too l to adjust the em issions factor based on use. This system provides a subjective A through E rating system that is of m i nim al value to the user b ecause the system does not quantify the lev el of uncertainty used in th e ratings. EPA places too much e m phasis on th e amount of test data used to develop the factor, and not on the quality of that data. If there is a significant am ount of test data , the factor is rated high, even though the data m ay be of poor quality. Further, even if a factor is rated “poor,” it will still be used. An em issions factors too l th at quantifies un certainty would provide users with valuable inform ation for adjusting the em ission s factor as appropriate; taking into account the level of uncertainty during calculations can give the user a better understanding of the variations between actual em issions and em issions factors calculations. Quantifying the uncertainty of an emissions factor requires a more rigorous analysis of the test data to establish a range of uncertainty for em issions estim ates. The Agency has been aware of such techniques, and over the past 10 years has funded several studies exploring the use of analytical techniques for quantifying uncertainty. In addition, the National Research Co uncil and th e NARSTO 9 organization reported that EPA should increase the use of quantifying uncertainty in the developm ent of em issions data. Also, E P A Order 5360.1 requires EPA to assess the quality of its data, and E P A’s current em issions factors ratingsystem is not consistent with the Order’s data quali ty requ irem ents. EPA officials told us that the m a jority of e m issions factors are developed using 10 points of data or less, which is substantially less than the 30 to 5 0 data points recomm ende d for the dev e lopm ent of a valid statistical analysis. Without incurring the additional cost of obtaining more data, the Agency can perform EPA-accepted statistical an alysis on existing data to provide users with an uncertainty rating. This will allow users to quantify the uncertainty of em iss i ons data de veloped from e m issions factors.

Form erly an acronym for “N ort h Am erican Research Strat e gy for Tropos phe ric Ozone,”NARST O is a public/pri vate part nership, whose m e m b ership spans gove rnm ent, utilitie s, industry, and academ ia throughout Me xico, the United States, and C anada

. Its pri m ary m i ssion is to c o ordinate and enhance policy-relevant scientific research.

17 9EPA and interested stakeholders agree that the benefits of conducting additional analysis outweigh the addition al resources needed to quantify the uncertainty. A rang e for the em issions estim ate will allo w the user to understand how m u ch lower or higher actual em issions vary when com pared to the em issio ns factor calculated estim ate. For exam ple, instead of an em issions factor being 30 pounds of e m issions per 1,000 gallons of fuel consum ed, the factor would have a quantifiable range – between 20 and 40 pounds – depending on the variables and uncertainties. An uncertainty expert we contacted quantified th e uncertainty of two key A-rated em i ssions factors in EPA’s AP-42 database. Both factors are rated “Excellent” – the h ighest level. Further , the two em issions factors represented a significant am ount of e m issions nationwide – estim ated em issions from a total of 32,569 coal-fired boilers. The potential variances wh en uncertainty is considered are shown in Table 3.1.
Table 3.1: Effect o f Emissions Fa ct ors Unc e rtaint y on Estimates for Co al-fired Boile rs*

Boiler Ty pe Emissions Estimate

(NO X Emissions) Emissions Change Due to Factor Uncert ainty Estimate of Probable Emissions (to ns) Low High Factor Uncert ainty Emissions Range (tons) Wall-fired 1,336,19 0 -41.4% to +33.2% 996,79 8 783,00 7 1,779,80 5 Tangen tial-fired 751,58 1 -31% to +27% 435,91 7 518,59 1 954,50 8 * E m issi o n s fac tors ra ng es: Wall- fired ( 12.9 – 29.3 ) lb/t on; Tan g en tial- f i red (10.4 – 19.0 ) lb/t on As Table 3.1 illustrates, EPA’s best-rated NO Xem issions factor for one type of coal-fired boiler (wall-fired) has an uncertainty range of plus 33.2 to m i nus 41.4 percent, meaning actual em issions nationwide could range from 783,000 tons to 1.8 m illion tons. Thus, without knowing the uncertainty associated w ith an em issions factor, the approxim ately 1.3 m illion tons reported for wall-fired boilers m ay be nearly as high as 1.8 m illion tons. Quantified uncertainty inform ation provid es a tool to the user to m ake m o re inform ed decisions for defining the appropriate uses of the em issions factor. Depending on the situ ation, the user can adjust the em issions factor based on this uncertainty. The f o llowing three uses of em issions factors dem onstrate how factors can b e adjusted:

x If the factor is being used for a natio nal estim ate, the user wo uld most likely choose an estim ate toward the m i ddle of the range (this is because o f the law of large num bers and the lik elihood that overand under-estim ates m ay tend to cancel each other out).

18x If the factor is being used to establis h a perm it lim it at a specific facility, the user m ay need to se lect an estim ate on the lower or higher end of the range, depending on variables and uncertainties.

x If the factor is being us ed for em issions trading or offsetting , an appropriate use m ay be the low e nd of the em issions factor range. The uncertainty tool could allow the user to select an appropriate adjustm ent based on its use. Im proving em issions factors will largely depend on the extent to which EPA can m i ni m i ze the lim itations associated w ith uncertainty. W i thout knowing the possible range of the estim ate, users are not adequately in form ed of the risks associated with using the emissions factor. 

### Inadequate Funding Pr ovided and Used Currently, EPA’s em issions factors workload is largely dictated by stakeholder needs, and E P A does not have a well-docum ented plan for prioritizing its work. Understandably , EPA officials have had to operate in a reactive m ode, focusing on State and industry requests involving specific em issions facto rs. However, m anaging em issions factors developm ent in this m anner does not allow a system atic approach to ensuring the m o st critical em issions factors are receiving the appropriate priority. EPA stated in its 1997 F e deral Managers’ Financial Integrity Act (FMFIA) Assurance letter that it wou ld request a substantial increase in funding for the developm ent of e m i ssions factors. As shown in Table 3.2, although EP A did request significant am ounts of funding for the Em issions Factors P r ogram since our 1996 report, it receiv ed about 25 percent or less of the am ount requested for 3 of the 7 years (1999, 2000, and 2002). However, EPA actually spent significantly less on the Em issions Factors P r ogram than had been appropriated, because EPA officials said em issions factors funds had been reprogramm e d to other air program activities consid ered to b e higher priority. As shown in Table 3.2, over the past 7 years, EP A spent between 29 percent and 72 percent o f the m oney it receiv ed, withabout h a lf of the funds received being reprogramm ed. Fr om 1999 to 2005, the program received $10,657,000, and spent a total of $5,301,000. It should be noted that there has been renewed em pha sis on em issions factors since the program was reorganized in 2003 (see next page). For exam ple, the am ount of funding spent in F i scal Years 2004 and 2005 increased substantially from the two previous years, although 2005 expenditures were still 59 percent lower than 2001 expenditures.

19Table 3.2: F unding of th e Emissions Factors Pro gram – b yFiscal Year BudgetaryAc ti v i ties 199 9 200 0 200 1 200 2 200 3 200 4 200 5 Req ueste d Amount $4,10 0,00 0 $4,95 0,00 0 $5,09 6,00 0 $3,07 5,70 0 $2, 59 0,40 0 $1,53 9,50 0 $4,65 2,60 0 Amount Rec eiv ed 1,100,0 00 1, 200,0 00 3,215,6 00 873,9 00 1,029,7 00 1,595,6 00 1,642,2 00 Amount Spe nt 323,5 00 490,0 00 2,326,5 0 0 310,0 00 320,0 00 573,0 00 958,0 00 Amount Re pro gramme d (776,5 00) (710,0 00) (889,1 00) (563,9 00) ( 709,7 00) (1,022,6 00) (684,2 00) Over the past 5 years, there have also b een several changes in the types of activities perform ed by th e Em issions Factors P r ogram , as shown in Table 3.3. W ith the exception of 2005, consistent funding has been devoted to m a intaining the databases. Program improvem ent s were nonexistent in 2002 and 2003; however, they have been a prim ary em phasis during the past 2 years. W ith the exception of spending $200,000 to help develop one em issions factor in 2005, the Em issions Factors P r ogram has largely not been involved in developing specific em issions factors since 2001, when over $1 m illion was spent.

Table 3.3: Emissions Factors Program Expenditure Anal y s is – b yF i scal Year * A c ti v i ties 199 9 200 0 200 1 200 2 200 3 200 4 200 5 Mainte nanc e o f Emissions Factors Databases $18 0,80 0 $22 1,00 0 $22 5,00 0 $24 5, 00 0 $27 5,00 0 $23 4,50 0 $75,0 00
Devel opm ent of Specific Emissions Fact ors 71,60 0 269,0 00 1,132,0 00 65, 00 0 45,00 0 43,00 0 260,0 00
Emissions Fact ors Program Improvements 71,10 0 0 969,5 00 0 0 295,5 00 623,0 00
Total $32 3,50 0 $49 0,00 0 $2,32 6,50 0 $31 0,00 0 $32 0,00 0 $57 3,00 0 $95 8,00 0

*Does n o t i n clu de Ad m i ni strati v e a nd Traini ng Expen diture s Given the increasing need for e m issi ons factors and a relatively sm all budget, EPA will need to better lev erage industryresources to obtain better em issions factors data. Although EPA recognizes the need to prioritize em issions factors work an d has m a de efforts to do so, a welldocum ented set of short- and long-term priorities does not yet exist. In its 1997 FMFIA assurance letter, OAQPS stated it would refocus the Em issions Factors P r ogram by prioritizing the m o st critical em issions factors, and hired a contractor to publish a docum ent prioritizing em issions factors developm ent. In 2002, the contractor published a docum ent, Recommended Source Categories for AP-42 Chapter Update and Emission Test Program , also called the Scoping Study. One OAQPS official said the Scoping Study was intended to be the blueprint for future work, resource allocation, and other key program decisions. T o date, EPA has not used the study to prioritize its em issions factors work. EPA officials said that they do not believ e they can p r operly p r io ritize the com peting needs of all of the em issions factors stakeholders to arrive at a common priority list to improve em i ssions factors.

20We agree that while developing a priority list of em issions factors is a challenge, it is critical fo r effectively m anaging the program

. Em issions factors users at both the State and Federal levels said th at EP A needs to prioritize its em issions factors work and fill the g a ps that currently ex ist. Also, the Air Quality Managem ent Work Group to the Clean Air Act Advisory Comm ittee recommended that EPA review existing em issions factors to id entify the m o st sign ificant needs. 

### Recent EPA Efforts Made to Revamp Emissions Factors Progra m EPA had recognized it did not have a sufficient process for developing, im proving, and rating emissions factors. Therefore, in fiscal year 2003, OAQPS began a reevaluation of the Em issions Factors P r ogram to:

x Identify ways to m ake the program more responsive to the broad and diverse range of em i ssions factors users;
x Identify m e thods that would expand the capabilities for im proving the num ber and quality of available em issions factors;
x Identify and im ple m ent ways to im prove and expedite the em issions factors developm ent process;
x Characterize the deficien cies of using em issions factors by quantifying the uncertainties associated with the varied uses; and
x Provide users with alternative m e thods of quantifying em issions to reduce the levels of uncertainty and to increase th e accountability of stakeholders. Upon conclusion of the re-evaluatio n, EFPAG decided to revam p the Em issions Factors P r ogram with the prim ary goal of im proving em issions quantification through th e use of better tools and knowledge of uncertainty. The revam ping plan includes three specific tasks: (1) standardizing and stream lining the em issions data collection and reporting process, (2) establishing procedures for defining data uncertainty and using em issions factors in non-inventory applications, and (3) establishing an outreach program to comm uni cate ch anges to em issions factors stakeholders. Specifically, EFPAG officials said th ey developed an elec tro nic repo rtin g tool th at establishes a standardized em issions test report format with bu iltin quality assurance checks. They said use of th is form at will enable State and local air pollution co ntrol offices to readily assess the qu ality of subm itted em issions tes t reports and to share tho se report res u lts with others. As the tool is used, result s from routine em issions tests should be easier to gather and those results sh ould already be quality assured.

21Consistent use of the tool should increase both the quantity and quality of em issions factors. For non-inv entory program s such as New Source Review and Title V perm itting, EFPAG conducted case studies identifying the impact of overor under-estim ating source em issions through use of e m issions factors. Acting on the results of those studies, statistical analyses of excellent and above average em issions factors were perform ed to determ ine the range of uncertainty associated w ith th ese fact ors. EFPAG indicated it is preparing those analyses for extern al peer rev iew, and at the sam e ti m e , is assessing the im pact of adjusting em issions factors for non-inventory program s. Once the analyses are validated, EFPAG plans to develop guidance for using em issions factors for non-inventory program s, and where applicable, the adju stm ents needed f o r em issions factors use for each pro gram
. EFPAG officials said th at th is guidance will im prove em issio ns estim ates and decisions based on those estim ates by reducing the uncertainty inherent with em issions factors use. Finally, EFP AG is upgrading the existing Internet W e b site, nam e d WebFIRE, from a static to an interactive m ode. Future plans for this newly-designed W e b site include the ability to co llect, screen, and adapt em issions data from the electronic reporting tool; calcu late av erage em issions factors; and provide individual users with site-specific values that incorpo rate associated uncertainties tailored to their specific program application in accordan ce with futureguidance. WebFIRE is also to provide the m eans to distribute new em issions factors, guidance, and procedures, as well as other m eans to better provide em issions inform ation. EPA should be comm ended for its efforts, but should place greater em phasis on im proving the quality of these facto rs. EFPAG agreed th at it should expand the electronic rating tool to includ e pollutants other than Particulate Matter, ensure the gu idance specifies how program specific adjustm ents are to be m a de, and program the interactiv e portio n of WebFIRE to accept n e w data and to calculate sp ecific adju stm e nts. 

### Comprehensive Plan Needed to Improve Data Collection and Set Priorities
The lack of a com prehensive strateg ic plan h i nd ers EPA’s ability to en sure the program is m oving in the right direction, m eeting its goals and objectives, and achieving the desired results. Som e key areas the plan should include are short- and long-term goals and objectives; steps and m easures to gauge progress in m eeting the goals; tim efram e s for m e eting m ilestones; and a process for reassessing and, when appropriate, revising the plan. A coordinated and well-thought-out p l an will enab le EPA to

22identify cost-efficient m e thods of obtaining m ore and better data, establish a communication strategy , and establish a system for prioritizing em issions factors developm ent. EPA has m a de efforts to address these key areas, although it is not clear how these efforts fit into E P A’s broader, long-term plans. Over the past 30 years, E P A’s Em issions Factors Program has relied largely on scavenging for source data to develop em issions factors and often uses source data originally gathered for other purposes. For exam ple, in the 1970’s, the program benefited from the source testing conducted by EPA for the developm ent of new em issions standards. Throughout the 1980’s and 1990’s, the am ount of EPA- funded source testing steadily declined, with a corresponding increase in industry-funded source testin g. Through its own in itiative, industry will som etim es conduct source testing to test em issions, but because the industry is not required to subm it the data, EPA often is not aware of the data. EPA needs to develop a system where it can gain access to the m illions of dollars worth of industry-generated source testing data. Currently, EPA is working on an inform ation system that it believes will prov ide the m u chneeded data to the stakeholders who need to develop em issions factors. If successful, this will b e an im portant step toward sharing valu able data. However, EPA will also need to dev elop incentives for indu stry to share this inform ation with the Agency. One way would be for EPA to issue guidance in accordan ce with EPA Order 5360.1 requiring an d allowing only appropriate use of em issions factors for the environm ental decisions to be m a de. Recognizing that im ple mentation of this criteria m ay take som e years, in the interim EPA could allow facilities to use the upper bounds of an em issions factor’s uncertainty range. Also, if a facility believ es the h i gher em issions rate stipulated by EPA’s ne w guidance does not reflect its actual em issions, the facility could conduct stack or other testing and share this inform ation with EPA in an effo rt to decrease the uncertainty of the em issions factor. The facility m ay be encouraged to do this in an effort to lower the upper bounds of the em issions factor uncertainty range and its resulting em issions estim ate. Over tim e, as m o re facilities s u bm it tes t data, EPA may have sufficient inform ation to decrease the uncertainty of poor quality em issions factors and thus im prove the estim ates for an entire source category. EPA also needs to establish a comm unications strategy. Em issions Factors Program officials said th at th ere are m any air quali ty stakeholders with useful inform ation, and accessin gthis knowledge pool can im prove the developm ent of e m i ssions factors. EPA has conducted som e outreach, through workshops and surveys, but the absence of a form alized

23communication strategy has resulted in valuable inform ation not being identified. A m o re fo rm al communication strategy will allow greater feedback and strengthen inform ation sharing. EP A specifically needs to share inform ation with stakeholders from four key areas:

x Em issions inventories
x Perm itting
x Industry
x Enforcem ent In 2004, EPA i m plem ented the Em issions Factors Im prove ment Project survey to solicit stakeholder feedback about the Em issions Factors Program and what im provem ents were needed. Of the 58 respondents, 37, or about 64 percent, said they did not subm it data to EPA. About onethird of the 37 said th ey did not prov ide data to E P A because they did no t know they should or how they should go about it. In addition, officials we interviewed from Regional Planning Organizations, the State and Territorial A i r Pollution Program Adm inistrators and the Association of Local Air P o llution Control Official s, State and Federal em i ssions invento ry an d perm ittingofficials, an d academ ia stated that th ey have lim ited or no contact with EPA on em issions factors. Instead of relying on stakeholders to contact them , EPA s hould system atically contact a broad range of stakeholders to gain access to inform ation and knowledge that could im prove the developm ent of em issions factors. The inform ation system that EPA is developing should increase stakeho lders’ ability to p r ovide additional data an d access o th e r useful em issions factors data. However, the system will not be effectively used unless EPA takes steps to ensure th at stakeho lders are aware of the inform ation system and its advantages. Procedures should be included in a communications strategy to regularly solicit key inform ation from stakeholders. 

### Conclusions
EPA officials describe the em issions inventory as the foundation for the air program , upon which everything else is built. Em issions factors estim ates are used to develop m u ch of this inventory and, as such, are critical m easures woven into the fabric of m any air quality m anagers’ most im portant decisions. Equally important, the m odels used to forecast changes in air quality un der altern ative reductionscenarios are also heavily reliant on accurate em issions factors and subsequent pollutant estim ates. One comm on use of these m odels provides decision-m akers with the inform ation needed to deve lop contro l strateg ies to lower air em issions. Other types of e m issions factors driven m odels are those used to identify the sources of pollution and link tho se sources to specific

24pollutants, selecting sites for increased m onitoring, testing em ission reduction scenarios to predict what impact they would have on pollutants of concern, and predicting changes in future con centration s. The results of these analyses shape EP A’s air qualityplanning. Use of inaccurate or incom plete data such as em issions factors can lead to costly, unjustified controls and/or exposures to pollutants that could negatively affect hum an health and welfare. Further, these analyses help define which industries need to be regulated, what level of controls are n e eded to ach ieve th e desired results, which sources should be targ eted for enforcem ent initiatives, and which pollutants are of the utm os t concern. Em issions data also influences EPA’s decisions in studying health effects, perform ing risk and exposure assessm ents, and identifying safe levels of air pollution. The reliability and accuracy of the em issions estim ates has far-reach ing im plications for how EPA sets its priorities and allocates the scarce resources av ailab le to m eet th e increasingly complex and daunting challenges of identifying the m ost cost-effective approaches to m aking the air cleaner. Em issions factors estimates, for all the uses noted above, are at the core of this process. Our findings verified that these factors rem ain significantly uncertain or unknown, despite their critical role. In fact, these factors are drawn upon by scientists, industry, States, and others and the rating system guiding their use does not m eet the requirem ents of the Agency’s data quality order. Wh ile more resources have been requested to im prove these factors, EFPAG has continued to receive significantly less m oney than needed over 6 of the last 7 years. Also, for the m oney it did receive f o r em issions factors, OAQPS redirected over half of these funds to other air program activities for 5 of those 7 years. If EPA continues to use insufficient m easures, such as poor and unknown quality em issions factors, to determ ine program results, the Agency m ay be overstating its progress to Congress and the public. That is, EPA m ay not be reaching the goals it has claimed to reach and the air may not be as clean as the Agency claim s. I f progress is overstated, it m ay also result in EPA and States m aking m i sinform e d decisions on selecting the m ost prom ising future actions for im proving the quality of the air. 

### Recommendations We recommend that the Acting Assi stant Adm inistrato r for Air and Radiation : 3-1 Establish a workgroup with representatives from e m issions invento ry, p e rm itting, in dustry, and enforcem ent, to develop an em issions factors gu idan ce docum ent that add resses: (a) The appropriate and prohibited uses of e m issions factors.

25(b) The intended use of the em issi ons factors estim ates and how to adjust the estim ates to more accurately reflect the use. (c) How to develop localized and site-sp ecific em issions factors. (d) How to account for em issions factors uncertainty in newly developed f actors and key existing factors. (e) Mechanism s for facilities and ind ustry sectors to follow in developing and providing to EPA em issions factors that m e et EPA Order 5360.1 data requirem e nts. 3-2 Develop and im ple m ent a com prehensive strategic plan that focuses on addressing future challenges expected in the Em issions Factors Program

. The plan should address developm ent of: (a) Criteria for prioritizing emissions factors developm ent, for both new factors and selected existing factors that have the most environm ental im pact. (b) A comm uni cations and partnering strategy that results in sustained feedback from key em issions factors users, including EPA and State perm it and enforcem e nt officials, and industry. (c) An inform ation system that st ream lines the co llection of source test data for the developm ent of e m i ssions factors. (d) Steps to ensure em ission s factors uncertainty an alysis is included in the developm ent, rating, and intended uses of em issions factors. (e) A Quality Managem ent Plan that ensures data used for the developm ent of em issions factors meet data quality requirem ents. 3-3 Once a com prehensive strategic plan is completed, have the Director for OAQPS ensure that all funds received for the Em issions Factors P r ogram are actually spent on the program and not reprogrammed to other air activities. 

### Agenc yComments and OIG Evaluation The Agency concurred with our reco mm endations and stated that they generally align with its current im prove m e nt efforts. The Ag ency agreed that developing m ore e m issions factors with less uncertainty is im portant in advancing the air program ’s inventory tools, but also noted that there is a need for even m o re accurate and representativ e em issions data for non

inventory uses – data obtained through direct em issions m easurem ents. We agree with the need for direct m easurem ents of e m issions, and believe

26that appropriate guidance from EP A on the proper uses of emissions factors would provide substantial incentives for industries and State, local, and tribal ag encies to work together to obtain such direct m easurem ents. However, we also recognize th at it m ay be years before such data are obtained and provided to EPA. The full Agency response is in Appendix C. A more detailed analysis of Agency comm ents and our evaluation of those comm ents are in Appendix D. The Agency will need to address each recomm endation and provide details and m ilestones on its plans to address the OIG recomm endations within 90 days, including:

x The status of EPA’s efforts to establish a workgroup to develop guidance for recomm endation 3-1, wh ich addresses the app ro priate and prohibited uses of em ission factors. EPA should also explain the intended use of e m issions factors estim ates and how to adjust the es tim ates to m o re accurately reflect th e use.

x Actions taken or planned to develop and im ple ment a com prehensive strategic plan, or sub m it a com pleted plan that includes the five elem ents listed for recomm endat ion 3-2.

x Specific steps taken or planned, as per recommendation 3-3, to ensure that f unds received for the Emissions Factors Program are spent on the program and not reprogrammed to other air activities.

27Appendix A 

## Details on Scope and Methodology

We conducted interview s with officials from : EPA’s OAQPS and Office Enforcem e nt and Com pliance Assurance; air perm itting officials from EPA Regions 4 and 6; North Carolina an d Indiana air pollution co ntrol agencies; State and Territorial Air Pollutio n Program Adm inistrators and the Association of Local Air P o llution Control Officials (STAPPA/ALAPCO); and the W e stern Regional Air Partnership and Midwest Regional planning organizations. We reviewed and discussed with these officials selected reports related to em issions factors, including:

x An April 2005 NARSTO report, Im proving Emission Inventories fo r Effective Air Quality Man agement Across North America: A NARSTO Assessment
x Two National Academy of Sciences reports: The Scientific Ba sis for Estim ating Air Emissions from Animal Feeding Operations: Interim Report (2002); and Air Emissions from Animal Feeding Operations: Current Knowledge, Future Needs (2003)
x EPA’s Proposed Amendments to Air Toxics Regulations for the Plywood and Composite Wood Products Industry, July 18, 2005
x EPA’s Compilation of A i r Pollutant Emission Factors, Volum e1: Stationary Point and A rea Sources, AP-42, Fifth Edition , issued January 1995
x A June 2004 EFPAG survey report, Summary of Emissions F a ctors Improvement Project Fact Finding Survey
x EPA’s Procedures for Preparing Emission Factor Documents, Nove m b er 1997
x Minutes from four Em is sions Factors Development W o rkshops ( Florida Conference – June 2004; Research T r iangle Park (North Carolina) Conference – November 2004: and tw o Washington, DC Confe rences – August 2004 )
x WHO’S COUNTING? The Systematic Underreporting of Toxic Air Emissions, June 2004, a joint study by the Environm ental Integrity Project and the Galveston-H ouston Association for Smog Prevention
x Evaluating Petroleum Industry VOC Emissions in Delaware, New Jersey and Southeastern Pennsylvania Final Report, October 2003, Mid-Atlantic Regional Air Managem ent Association To assess managem ent controls, we reviewed the Office of Air and Radiation’s and OAQPS’s fiscal year 2004 Integrity Act Annual Assurance L e tters. To obtain an understanding of the quantification of uncertainty of e m issions factors, w e interviewed an em issions factors uncertainty expert from North Carolina State University and reviewed technical papers associated with th e subject.

28MethodologyUsed to Calculate Emissions Factors Uncertaint yfor Coal-fired Boilers in Table 3.1
Em issions estim ates were obtained from the draft 2002 EPA National Em issions Inventory (NEI). Factor uncertainty ratings were obtained for each source type from an em issions factors uncertainty expert. Probabl e em issions estim ates were calcu lated b y applying the uncertainty rating to em issions estim ates, which results in a p r obable low and high range of e m issions. This is known as the probabilistic em issions inventory, or PEI. Using the PEI allowed us to illustrate uncertainty in the NEI. PEI is a function o f the repo rted em issions and the em issions factor uncertainty (UF EF ) and activ ity data uncertainty (UF AF ). It is the probable range of emissions values in which the reported individual em issions would be found. To calculate the PEI associated with a portion of the NEI, we obtained the reported emissions value for two Source Categorization Codes. The UF EF for each source catego ry was m u ltiplied by the point estim ate of the em issions for each category (from 2002 NEI) and summed ov er the two catego ries to arriv e at a PEI: 

### PEI = Ȉ [( UF EF 

### ) (UF AF 

### ) (EI)] For this formula, PEI is summed over all source catego ries that have rep orted em issions (lb/yr). We reviewed the following docum ents related to this an alysis:

x Report 99-267 (1999), North Carolina State University, Raleigh, North Carolina
x 2002 Em issions (NEI); Air Pollution Control Lecture Notes, North Carolina State University
x Emission In ventory: Planning for the Future, October 28-30 , 1997, Research Triangle Park, North Carolina
x Journal of the Air & Waste Management Association, 2003
x Environmental Science and Technology, 2004
x Quantitative Analysis o f

Uncertain ty and Variability in Enviro nmental Policy Making, 1992
x Risk Analysis, 2004 Prior Coverage and Follow up We followed up on EPA’s actions on previous recomm endations from EPA OIG Report No. 6100306, Emission Factor Development, Septem ber 30, 1996. As part of this followup work, we reviewed OAQPS’s fiscal years 1997 and 1998 Integrity Act Annual Assurance L e tters. W e had found that EPA was providing poor and unreliable em issions factors to the user community. W e recommende d that the developm ent of e m issions factors be included as an Ag ency m aterial weakness in FMFIA reporting. In its response to the draft report, EPA recognized the significant role of em issions factors, and as such, indicated it would take the followingcorrectiv e action :

29x Refocus the program to address th e most critical f actors n eeded.
x Request nearly four tim e s the am ount of contract resources in the fiscal year 1999 budget request to the Office of Managem ent and Budget.
x Request $5 m illion of addition al funding from Congress for Particulate Matter research in f i scal year 1998 to be used for developing Particulate Matter em issions factors. Details on what we found as a result of our followup, as well as recomm e ndations, are in Chapters 2 and 3 of this current report. We also reviewed two other reports that addressed em issions factors developm ent, although we did not do followup. These were a GAO report, EPA Should Improve Oversight of Emissions Reporting b yLarge Facilities (GAO-01-46), April 2001; and an EPA OIG re port, Substantial Changes Needed in Implementation and Oversight of Title V Perm its If Program Goals Are To Be Fully Realized (2005-P-00010), March 9, 2005. Limitations Our work contained the following lim itations:

x We did not review em issions factors for all pollutants from all sources.
x We did not review any em issions factors for m o bile sources.
x The quantified uncertainty inform ation in Table 3.1 for two NO Xe m issions factors is unpublished data provided by the NorthCarolina S t ate University em issions factors uncertainty expert, who was contracted by EPA to perform the uncertainty analysis.

30Appendix B 

## Details on Concentrated Animal Feeding Operations Air Emissions

Concentrated Ani m al Feeding Operations (C AFOs) are agricultural entities th at raise anim als in confined areas and pose a potential environm ental risk as a result of the high concentratio ns of anim al s and their waste. Air em issions from agriculture sources generally have characteristics that make them difficult to control through the m o re conventional control technologies used at indu strial sources. The di fficulty and cost of monitoring agricu ltural pollution so urces is a reason that CAFOs are largely unregu lated regarding air em issions. EPA asked the National Academy of Sciences to evaluate the scientific inf orm ation needed to ad dress CAFO air em ission s issues. 10 The Academy found that the basic data needed for effective regulation and managem ent of CAFO e m i ssions do not exist. Reasonably accurate es tim ates of air em issions from CAFOs at the indiv idual farm level will require defined relationships between air em issions and various factors. The Academy al so found that directly m e asuring em issions from CAFOs is not feasible and existing em issions facto rs are gen erally inadequ ate. A m a jor effort will b e required to develop usef ul CAFO e m issions factors. EPA’s need for better data has led to an agreem ent between E P A and some secto rs of the anim al industry to m onitor air quality on farm s. This voluntary agreem ent calls for a 2-year national air m onitoring study on em issions. Data developed from this study will be used to develop em issions factors. As part of the agreem e nt, EPA indicated it will provide certain legal protections for past and current em issions violations for farm s that participate. Environm ental advocates have criticized EPA forproviding this protection, and a form erEPA staff attorney said EPA should not suspend its enforcement authority when the Clean Air Act already requ ires fac ilities to provide this data. H owever, according to EPA, this settlem ent will result in C A FO operators funding scientifically credible m e thodologies f o r estim ating em issions as recomm e nded by the National Academy of Sciences in its 2003 report.

Air E m issions from Animal F eeding Ope rati ons : C u rre nt K nowle dge , F u tu re Nee d s (2003)

31 10Appendix C 

## Agency Response to Draft Report

February 23, 2006
MEMORANDUM
SUBJECT: Draft Evaluation Report: EPA Can Improve Em issions Factors Developm ent and Managem ent, Assignm ent No. 2005-00279
FROM: W illiam L. W e hrum ( Elizabeth Cra ig for) Acting Assistant Adm inistrato r TO: J. Rick Beusse Director for Program Evaluation, Air Issues Office of Inspector General
Thank you for the opportunity to comment on the draft evaluation report, “EPA Can Im prove Emissions Factors Developm ent and Managem e nt,” dated December 21, 2005. My staff also appreciated the opportunity to work with you to incorporate comm ents on the prior versions of the draft report. The em issions factor (E F) concept was developed in 1970 by the Office of Air Quality Planning and Standards National Air Data Branch to estim ate em issions from the m illions of em itters in th e U.S. for which m easurem ents were either im possible to m ake or had not yet been m a de. EFs were, and still are, the first step toward q u antifying em issions in a basic way for estim ating annual em issions. EFs represented a significant advance over previou s estim ating techniques or p o licies and were necessary and adeq uate for their tim e. While we agree th at EFs are inh erently uncertain and im perfect, See Appendix D developing more EFs or m o re certain EF s is im portant in adv ancing th e air Note 1 program ’s inventory tools. However, we believe that focusing our efforts only on EF developm ent obscures th e real need for m o re accurate and representative em issions data for non-inventory uses. W e believe the air program needs m o re direct m easure m ents of em issions for our advanced m o dels, strategies, and national program s. This need was em phasized strongly by the National Research Council of the National Academ ies in its report, “Air QualityManagem ent in the United States” (National Academ ies Press, 2004). Currently, we are m oving toward better em issions m onitoring requirem ents for all m a jor polluters that will enhance our response to environm ental challenges.

32The recommendations provided by the Office of the Inspector General generally align with our current EF program i m provem ent See Appendix D efforts. However, the report could better em phasize that: (1 ) EFs are Note 2 just th e first step toward quantifying em issions in a basic way; and (2) EPA is shifting its efforts toward m o r e direct, continuous m onitoring and m easure m ent of em issions from all m a jor em issions sources.
For exam ple, EPA is currently: (1 ) working on a process to q u antify the un certainties associated w ith th e application s of EFs, and (2) establishing procedures to incorporate additional data into calculating EFs to reduce the uncertainty associated w ith th e EF. Even with th e ability to incorporate un certaintyinto the app lication of an EF, EFs remain estim ates an d not direct em issions measurem ents. More advanced, accurate, continuo us, and short-term determ inations of em issions are needed for m a jor em itters, and these go als can only be reached by shifting to di rect em ission s m easurement and m o nitoring system s. Additional editorial comm ents are provide d in the attachm e nt. If you have any questions or need clarification, please contact Peter Tsirigotis of mystaff at (919) 541-9411.

33Attachm ent (1) The draft evaluation report m akes se veral references to the m i suse or inappropriate use of EFs. These references should be linked to the m i suse or See Appendix D inappropriate use of EFs in non-inventory programs or applications

. W e note the Note 3 following places in the d r aft evalu ation report wh ere clarification would be appropriate:

x At a Glance, What We R ecommend , 1 st paragraph -- We are making a num b er of reco mmendations to EPA t o , am ong other things, develop em issions factors guidance that addresses the developm ent and appropriate use of fact ors in non-emissions invent or yprograms; x At a Glance, What We F ound , 2 ndparagraph -- Emissions fact ors have been inappropriately used for ke y environm ental decisions of non-em issions inventor y pr ograms, such as setting perm it li m its and reporting the level of air polluti on c ontrol at specific facilities.
x Chapter 1, Purpose, 2 nd paragraph, 1 st bullet -- Em issions factors are of an accep tab le quality for use in key environm ental decisions made by EPA and State an d local agen cies for non-em i ssions inventory program s ; (2) In addition, clarification is appropriate in the following sections: See Appendix D 3⁄4 Chapter 1, Background – In the paragraph on S ource Testing and Note 4 Material Balance, the cost figures are stated as absolute, when in reality they vary from pollutant to pollutant. The cost in form ation would be m o re accurately expressed in ranges:

x Source Testing -- $10,000 to $50,000 annual cost;
x Material Balance -- $2,000 to $10,000 per year per process. 3⁄4 Chapter 3, Rating System Does Not Define Appropriate U s es and At a See Appendix D Glance, Wh at We Found – The inform ation in the bullets below Table 3.1 Note 5 in Chapter 3, Rating System Does Not Define Appropriate Uses mo r e correctly ch aracterizes the adjustm ents to applying EFs based on data uncertainty in inventory applications. It would be appropriate to express th is sm aller range of potential errors in the ex ample cited at the botto m of paragraph three in the What We Found section. 3⁄4 Chapter 3, Comprehensive Plan N eeded to Improve Data Collection a n d See Appendix D Set Priorities– The second paragraph in this section includes som e Note 6 clarifying historical context. Placing this text in the introduction (Chapter 1, Purpose section) would provide this historical context at the outset of the report.

34Appendix D 

## OIG Evaluation of Agency Response

Note 1 – We agree th at em issions factors are the first step in quantifying estim ates of actual em issions and that direct m easures are the preferred em issions m easure. We also agree with th e Agency’s in creased efforts to obtain more direct em issions measures, such as m onitoring data, for non-inventory uses. W e have revised the report to reflect these points. H owever, considering the extensive use of e m issions factors to day for both inventory and non-inventory uses, we believe that em issions factors m ay continue to be used extensively for the foreseeable future. For exam ple, in respo nding to a March 2004 EPA OIG report, 11 EPA informed us that it did not have the statutory authority to require the subm ission o f hazardous air po llutant monitoring data from St ate and local ag encies. Em issions facto r -develop ed em issions inventory data will continue to be used frequently as a cost-effective m e thod of estim ating em issions, as com pared to m o re expensive em issions m easurem ents such as direct em issions m onitoring. In the future, increased m onitoring data m ay reduce the use of e m issions factors for m a jor sources; however, m obile and area sources are m o re likely to rely on em issions factors for a longer period of tim e. Therefore, we continue to belie ve that em issions factors m ay continue to be an integral part of the Air program for a significant length of tim e, and as such, sho uld receive the resources needed to improve factor quality and the reliability u s ing these estim ates. Note 2 – We are enco uraged th at EPA believe s our recomm e ndations generally align with EPA’s current Em i ssions Factors Program improvem entefforts, and based on our work, we would agree. We do, however, differ som e what on our views of the projected use of e m issions factors inthe future. Please see Note 1 for details.
Note 3 – W e revised the report to reflect the use of em i ssions factors in “non-inventory program s or allocations,” where appropriate. For exam ple, in the At a Glance, What We R e commend, fi rst paragraph, we added that we believe guidance is needed for the non-inventory uses of e m issions factors. How ever, in Chapter 1, Purpose, second paragraph, first bullet, we did not change this because our objectives w e re to addres s both inventory and non -inventory u s es of e m issions factors.
Note 4 – We agree with this comm ent and have m a de these changes to our draft report.
Note 5 – Due to space lim itations in the “At a Glance” section of the final repo rt, w e could not accommodate the Agency’s desire that we m o re fully characterize

EPA’sMethod for Calc ulating Air Toxics E m issions f o r Reporting Res ults Needs Improve ment, Repo rt No . 20 04­ P-00012, March31, 2004

35 11an illustration of the im pact of em issions factor uncertainty on estim ates of em issions nationwide; however, we have added such an illustration on page 18 below Table 3.1, and rem oved our discussion of this inform ation in the “At a Glance.”
Note 6 – We agree with this comm ent and adde d a paragraph to the background section in Chapter 1 to provide the requested historical context to the Em issions Factors Program

.

36Appendix E 

## Distribution
EPA Headquarters Office of the Adm inistrator Acting Assistant Adm inistrator for Air and Radiation Assistant Adm inistrator for Research and Developm ent Agency Followup Official Agency Followup Coordinator Audit Followup Coordinator, Office of Air and Radiation Audit Followup Coordinator, Office of Research and Developm ent General Counsel Associate A dm i nistrator for Congressional and Intergovernmental Relations Associate Administrator for Public Affairs Directo r, Office of Air Quality Planning and Standards Deputy Director, Office of Air Quality Planning and Standards Director, E m issions Standards Division Acting Director, Em issions, Monitoring and Analysis Division Director, National Exposure Research Laboratory Audit Liaison, Office of Air Quality Planning and Standards
EPA Regions Regional Air Program Directors

EPA Offic e of Inspe ctor General Acting Inspector General

37