UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX 75 Hawthorne Street San Francisco, CA 94105·3901 

## SEP 1 1 

### 2009 CERTIFIED MAIL RETURN RECEIPT REQUESTED 70062150000045488857

m Reply: AIR-5 Refer To: DocketNo.'s R9-09-17 R9-09-18 R9-09-19
Kevin J. Hunt, President Ralcorp Holdings, mc. 800 Market Street, Suite 2600 St. Louis, MO 6310I Re: Cottage Bakery, mc. Lodi, California Dear Mr. Hunt: Enclosed for your infonnation is a copy ofa Finding ofViolation ("FOV") and two Notice ofViolations ("NOVs") issuedbythe United States Environmental Protection Agency ("EPA") to Cottage Bakery, Inc. ("Cottage Bakery"), concerning the operation of its bakeryproduction facility in Lodi, California ("the Facility"). Cottage Bakeryis a business segment ofRalcorp Frozen BakeryProducts, mc., a division ofRalcorp Holdings, mc. ("Ralcorp"), and is locatedwithin thejurisdiction ofthe San Joaquin Valley Air Pollution Control District ("District"). The FOVhas been issuedbecause the Facilityis a major source and it failed to apply for and obtain a Title V operating pennit. The NOVs have been issuedto address alleged violations ofRules 2010 ("Pennits Required"); 2201 ("New and Modified Stationary Source Review Rule"); and 4693 ("Bakery Ovens"). Each ofthese rules is in the District's portion ofthe California State Implementation Plan. The NOVs allege that the Facility: (i) violated Rule 2010 by failing to obtain appropriate pennits prior to construction and operation ofemissions units; (ii) violated Rule 2201 by failing to comply with BestAvailable Control Technology and offset requirements; (iii) violated Rule 4693 by failing to ventbakery oven emissions to an approved emission control device.

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### you wish to discuss the FOV and NOVs, you may request a conference with EPA. The conference would afford Cottage Bakery and Ra1corp an opportunity to present information bearing on the finding ofviolation, the nature ofthe violation, any efforts you have taken to achieve compliance, and the steps you propose to take to achieve compliance. Please contact Kara Christenson, Office ofRegional Counsel, at (415) 972-3881, to request a conference. Such request should be made as soon as possible, but in any event no later than 10 working days after receipt ofthis letter. Sincerely, 

# IfJ)M Deborah Jordan Director, Air Division Enclosures

cc: Mr. Seyed Sadredin, APCO, San Joaquin Valley Air Pollution Control District Mr. James Ryden, Chief, Enforcement Division, California Air Resources Board TimWiese, RalcorpHoldings, Inc. Russ Haswell, Ra1corp Holdings, Inc. Steven Poplawski, Bryan Cave LLP Susannah Mitchell, Bryan Cave LLPUNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX 75 Hawthorne Street San Francisco, CA 94105·3901 

## SEP 1 1 2009
In Reply: AIR-5 Refer To: Docket No.'s R9-09-17 R9-09-18 R9-09-19

Mr. Seyed Sadredin Air Pollution Control Officer San Joaquin Valley Air Pollution Control District 1990 E. Gettysburg Avenue Fresno, CA 93726-0244 Re: Cottage Bakery, Inc.

### LOdi' California 

## /. Dear adredm: Enclosed for your information are a copy ofa Finding ofViolation ("FOV") and two Notice ofViolations ("NOVs") issued bythe United States Environmental Protection Agency ("EPA") to Cottage Bakery, Inc. ("Cottage Bakery"), concerning the operation of its bakeryproduction facility in Lodi, California ("the Facility"). Cottage Bakery is a business segment ofRa1corp Frozen Bakery Products, Inc., a division ofRa1corp Holdings, Inc. ("Ralcorp"), and is located within thejurisdiction ofthe San Joaquin Valley Air Pollution Control District ("District"). The FOV has been issued because the Facility is a major source and it failed to apply for and obtain a Title V operating permit. The NOVs have been issued to address alleged violations ofRules 2010 ("Permits Required"); 2201 ("New and Modified Stationary Source Review Rule"); and 4693 ("Bakery Ovens"). Each ofthese rules is in the District's portion ofthe California State Implementation Plan. The NOVs allege that the Facility: (i) violated Rule 2010 by failing to obtain appropriate permits prior to construction and operation ofemissions units; (ii) violated Rule 2201 by failing to comply with Best Available Control Technology and offset requirements; and (iii) violated Rule 4693 by failing to vent bakery oven emissions to an approved emission control device.

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### The FOV and NOVs inform Cottage Bakery and Ralcorp that a conference on these matters may be arranged by making a request to this office within 10 working days after receipt. If 

### such a conference is held, you will be advised and your participation would be welcome. If 

### you have any questions concerning the FOV and/or NOVs, please contact Cyntia Steiner, AirEnforcement Office, at (415) 947-4112. Sincerely,



# .

Deborah Jordan Director, Air Division EnclosuresUNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX 75 Hawthorne Street San Francisco, CA 94105·3901 

### SEP 11 2009 In Reply: AIR-5 Refer To: Docket No.'s R9-09-17 R9-09-18 R9-09-19

Mr. James Ryden Chief, Compliance Division California Air Resources Board P.O. Box 2815 Sacramento, CA 95812 Re: Cottage Bakery, Inc. Lodi, California Dear Mr. Ryden: Enclosed for your information are a copy ofa Finding ofViolation ("FOV") and two Notice ofViolations ("NOVs") issued bythe United States Environmental Protection Agency ("EPA") to Cottage Bakery, Inc. ("Cottage Bakery"), concerning the operation of its bakeryproduction facility in Lodi, California ("the Facility"). Cottage Bakery is a business segment ofRa1corp Frozen Bakery Products, Inc., a division ofRa1corp Holdings, Inc. ("Ra1corp"), and is located within thejurisdiction ofthe San Joaquin Valley Air Pollution Control District ("District"). The FOV has been issued because the Facility is a major source and it failed to apply for and obtain a Title V operating permit. The NOVs have been issued to address alleged violations ofRules 2010 ("Permits Required"); 2201 ("New and Modified Stationary Source Review Rule"); and 4693 ("Bakery Ovens"). Each ofthese rules is in the District's portion ofthe California State Implementation Plan. The NOVs allege that the Facility: (i) violated Rule 2010 by failing to obtain appropriate permits prior to construction and operation ofemissions units; (ii) violated Rule 2201 by failing to comply with Best Available Control Technology and offset requirements; and (iii) violated Rule 4693 by failing to vent bakery oven emissions to an approved emission control device. The FOV and NOVs inform Cottage Bakery and Ra1corp that a conference on these matters may be arranged by making a request to this office within 10 working days

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### you have any questions concerning the FOV and/or NOVs, please contact Cyntia Steiner, Air Enforcement Office, at (415) 947-4112. Sincerely,

Director, Air Division EnclosuresUNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 9

In the Matter of: ) Docket No. R9-09-17 ) Cottage Bakery, Inc. ) Finding and Notice ofViolation Lodi, California ) ) Proceeding Under Section 113(a), )**~C~le~a~n~A~ir~A~ct~,~A~s~A~m~e~n~d~ed~** ____________**~)** This Finding and Notice ofViolation ("NOV") is issued to Cottage Bakery, Inc. ("Cottage Bakery") for violations ofthe Clean Air Act ("CAA" or "Act") as amended, 42 U.S.C. §§ 7401-7671q, at its manufacturing facility located in Lodi (San Joaquin County), California (the "Facility"). The Facility is located within thejurisdiction ofthe San Joaquin Valley Air Pollution Control District ("SJVAPCD" or "District").! This FOV is issued under the authority and at the discretion ofthe Director ofthe Air Division for EPA, Region IX.2 GENERAL STATUTORY AND REGULATORY BACKGROUND Title V Operating PermitProgram Requirements 1. Title V ofthe Act requires major stationary sources ofair pollution to obtain an operating permit that includes emissions limitations and such other conditions as necessary to assure compliance with applicable requirements ofthe Act. See 42 U.S.c. §§ 7661a-766lf. EPA's regulations implementing

! San Joaquin County is classified as a "severe" non-attainment area under EPA's 1997 8-hour ozone National Ambient Air Quality Standard ("NAAQS") and as an "extreme" non-attainment area under EPA's I-hour ozone NAAQS. 40 C.F.R. §81.305. See also, 69 Fed. Reg. 20550 (April 16, 2004). In addition, on August 27,2009, EPA proposed to grant a request by the State ofCalifornia to reclassify the San Joaquin Valley area (including San Joaquin County) from "serious" to "extreme" with regard to EPA's 1997 8-hour ozone NAAQS. 74 Fed. Reg. 43654 (Aug. 27, 2009). 2 Section 113(a)(1) requires the Administrator ofthe EPAto notify a person in violation ofa state implementation plan. This FOV alleges violations ofTitle V; therefore, itis not a statutory prerequisite to enforcement. Weare issuing this FOV to provide Ra1corp with notice ofEPA's findings ofnon-compliance at the Facility.the Title V operating pennitprogram are found at 40 C.F.R. Part 70. See 57 Fed. Reg. 32250 (July 21, 1992). 2. The District adopted Rule 2520 to implement Title V on June 15, 1995. EPA granted interim approval to the District's Title V program effective May24, 1996 and granted full approval effective November 30,2001. 40 CFRPart 70, Appendix A; 66 Fed. Reg. 63503 (December 7,2001). 3. The District's Title V program defines a major stationary sburce as including a source with the potential to emit more than 50,000 pounds (25 tons) per year ofvolatile organic compounds ("VOCS,,).,,3 SJVAPCD Rule 2520, §3.19 and Rule 2201, §3.25. 4. The District's Title V program requires a major source to submit a Title V pennit application within 12 months after becoming subjectto the pennitprogram. SJVAPCD Rule 2520, §5.1. 5. EPA's regulations, at 40 CFR §70.5(a), provide that the owner or operator ofatitle V source must submit a timely and complete pennit application. Section 70.5(a)(1) further provides that a timely and complete application is one submitted within 12 months after the sourcebecomes subjectto the pennitprogram or on orbefore such earlier date as the pennitting authoritymayestablish. 6. Section 502(a) ofthe Actprovides that, after the effective date ofa Title V pennitprogram, operation ofa major stationary source without a Title V operating pennitis a violation ofthe Act. 42 U.S.C. §7661a(a). FINDINGS OF FACT 7. The Facility is a commercial bakeryfacility located at 1831 S. Stockton Street, Lodi, California. The Facilityhas existed at this location since at least 1997. The Facilityis capable ofoperating 24 hours per day, 7 days perweek, 52 weeks per year. 8. Until November 2006, the Facilitywas owned bythe Knutson Family Trust and several charitable organizations. InNovember 2006, ownership and operation ofthe Facilitywas transferred to Ralcorp

3Ground-level ozone is fonned whenVOCs react withnitrogen oxides (,'NOx") inthe presence ofsunlight. As precursors to ozone, VOCs are regulated pollutants. 2Holdings, Inc. Currently, the Facility is owned and operated byRalcorp Frozen BakeryProducts, Inc. ("RFBP"), a division ofRa1corp Holdings, Inc. 9. On or about August 12,2009, RFBP submitted an application for a permit to operate to the District ("Permit Application"). 10. RFBP's Permit Application stated that the Facilityoperates natural gas fired bakery ovens and one cake oven. RFBP's Permit Application also states that the ovens were installed at various times between 1997 and 2006. 11. RFBP's PermitApplication also states that the Facilityhas one boiler, which is rated at 4.95 MMBtu. 12. RFBP's PermitApplication states that the Facilitymakes bakedbreads and cakes. The bread dough

uses yeast for sandwichbread and levain for artisan breads. VOCs are emitted when the bread is baked. VOC-containing flavorings are added to the cake batter and VOCs are emitted when the cake is baked. 13. RFBP's Permit Application states that the Facility'spotential to emit VOCs is 124.4 tpy. RFBP's Permit Application also states that the Facility emitted 31.24 tons ofVOCs in 2008 from thebread products. 14. RFBP's Permit Application states that the Facilityhas no permitted emission units. FINDINGS OF VIOLATION Finding ofFailure to Submit a Timely Title V Permit Application and Finding ofOperation of

### a Major Source without a Valid Title V Permit 15. The Facility is a major source ofairpollution, as that term is defined in the District's Title V program. See, SN APCD Rule 2520, §3.19 and Rule 2201, §3.25. 16. The Facilitywas required to have submitted a Title V permit application no later than 12 months after becoming subject to the program. 17. The Facilityhas not submitted a Title V permit application.



### 318. The Facilityhas been operating as a major source ofair pollution without a valid Title V permit. 19. The Facilityis in violation ofsection S02 ofthe Act, 40 C.F.R. §70.S(a), and 

### SN APCD Rule 2S20, §S.1. 20. The Facilitywill continue to be in violation ofsection ofS02 ofthe Act, 40 C.F.R. §70.S(a), and SJVAPCD Rule 2201, §S.l until it obtains a valid Title V permit or a valid limit on its potential to emit. NOTICE OF VIOLATION Notice is given to Cottage Bakery, Inc. that the Administrator ofthe United States Environmental Protection Agency, byauthority duly delegated to the undersigned, finds that Cottage Bakery, Inc. is in violation ofsection S02 ofthe Act and its implementing regulations, as set forth inthe Findings of Violation. ENFORCEMENT Section 113(a)(3) ofthe Actprovides that when anyperson has violated anyrequirement or prohibition ofTitle V ofthe Act, EPA may: issue an order requiring compliance with such requirement or prohibition, or issue an administrative penalty orderpursuant to section 113(d) for civil administrative penalties ofup to $37,SOO per day ofviolation, or bring a civil action pursuant to section 113(b) for injunctive reliefandlor civil penalties of not more than $37,SOO per day for each violation. Furthermore, ifa person knowinglyviolates requirements relating to Title V, section 113(c) provides for criminal penalties or imprisonment, orboth. Under section 306(a) ofthe Act, the regulations promulgated thereunder (40 C.F.R. Part IS), and Executive Order 11738, facilities to be used in federal contracts, grants, and loans mustbe in full



### 4compliance with the Act and all regulations promulgatedpursuant to it. Violations ofthe Actmayresult in the facility being declared ineligible for participation in any federal contract, grant, or loan. PENALTY ASSESSMENT CRITERIA Section 113(e)(I) ofthe Act states that the Administrator orthe court, as appropriate, shall, in determining the amount ofanypenaltyto be assessed, take into consideration (in addition to such other factors asjusticemayrequire) the size ofthe business, the economic impact ofthe penalty on the business, the violator's full compliance history and good faith efforts to comply, the duration ofthe violation as established byany credible evidence (including evidence otherthan the applicable test method), payment bythe violator ofpenalties previously assessed for the same violation, the economic benefit of noncompliance, and the seriousness ofthe violation. Section 113(e)(2) ofthe Act allows the Administrator or the court to assess a penalty for each day ofviolation. Forthe purposes ofdetermining the number ofdays ofviolation, where the EPA makes a prima facie showing that the conduct or events giving rise to this violation are likelyto have continued or recurred past the date ofthis FOV, the days ofviolation shall bepresumed to include the date ofthis FOV and each and every daythereafter until the violator establishes that continuous compliance has been achieved, except to the extent that the violator canprove bythe preponderance ofthe evidence that there

were intervening days during which no violation occurred orthat the violation was not continuing in nature.

OPPORTUNITYFOR CONFERENCE Cottage Bakerymay, upon request, confer with EPA. The conference will enable Cottage Bakery to present evidence bearing on the finding ofviolation, the nature ofthe violation, and any efforts itmay have taken orproposes to take to achieve compliance. Cottage Bakeryhas the right to berepresented by counsel. A request for a conference with EPA mustbemade within ten (10) working days ofreceipt of



### 5this FOV. Therequest for a conference or other inquiries concerning the FOV shouldbe made in writing to: Kara Christenson Office ofRegional Counsel (ORC-2) 

## u.s. Environmental Protection Agency 75 Hawthorne Street San Francisco, California 94105 (415) 972-3881

# DeblMn~ Director, Air Division



### 6UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 9

In the Matter of: ) DocketNo. R9-09-I8 ) Cottage Bakery, Inc. ) Finding and Notice ofViolation Lodi, California ) ) Proceeding Under Section Il3(a), )**~C~le~a~n~A~ir~A~c~t~,~A~s~A~m~e~n~de~d~** ______________)

This Finding and Notice ofViolation (''NOV'') is issued to Cottage Bakery, Inc. ("Cottage Bakery") for violations ofthe Clean AirAct ("CAA" or "Act") as amended, 42 U.S.c. §§ 740l-767lq, at its manufacturing facility located in Lodi (San Joaquin County), California (the "Facility"). The Facilityis located within thejurisdiction ofthe San Joaquin ValleyAir Pollution Control District ("SNAPCD" or "District"). Section Il3(a)(1) ofthe Actrequires the EPAAdministrator to notify a person in violation of

a state implementation plan. The authorityto issue NOVs has been delegated to the Director ofthe Air Division for EPA, Region IX. GENERAL STATUTORY AND REGULATORY BACKGROUND 1. Section 11O(a) ofthe Actrequires that all states adopt state implementationplans ("SIPs") that provide for the implementation, maintenance and enforcement ofprimary and secondary air quality standards. 42 U.S.c. §7410(a). 2. Pursuant to Section 107(d) ofthe Act, 42 U.S.c. §7407(d), the Administratorhas promulgated lists of attainment status designations for each air quality control region ("AQCR") in every state. These lists identifythe attainment status ofeach AQCR for each ofthe criteria pollutants. The attainment status designations for California AQCRs are listed at 40 C.F.R. §81.305. 3. The Facility is located in San Joaquin County, which is within thejurisdiction ofthe San JoaquinValley Air Pollution Control District ("SNAPCD" or "District"). San Joaquin County is classified as
a "severe" non-attainment area under EPA's' 1997 8-hour ozoneNational AmbientAir Quality Standard ("NAAQS") and as "extreme" non-attainment area under EPA's I-hour ozone NAAQS. 40 C.F.R. §81.305. See also, 69 Fed. Reg. 20550 (April 16, 2004). In addition, on August 27,2009, EPA proposed to grant a requestbythe State ofCalifornia to reclassifythe San Joaquin Valley area (including San Joaquin County) from "serious" to "extreme" with regard to EPA's 1997 8-hour ozone NAAQS. 74 Fed. Reg. 43654 (Aug. 27, 2009). 4. Section 182(b)(2) ofthe Act requires states to have SIP rules thatrequire all major sources ofVOCs located in ozone non-attainment areas classified as moderate and above to implement Reasonably Available Control Technology ("RACT,,).l 42 U.S.c. §7511a(b)(2). 5. A person's failure to complywith any approved regulatoryprovision ofa SIP renders the person subject to enforcement under section 113 ofthe Act. 42 U.S.c. §7413(a)(I); 40 C.F.R. §52.23. SJVAPeD Rule 4693 Bakery Ovens 6. In accordance with Section 110 ofthe Act, EPA has approved Rule 4693 (Bakery Ovens) as adopted

on May 16, 2002, into SJVAPCD'sportion ofthe California SIP. 69 Fed. Reg. 22441 (April 26, 2004). 7. Section 2.0 ofRule 4693 provides: "Therequirements ofthis rule shall applyto bakery ovens operated at major source facilities, which emit VOCs during the baking ofyeast-leavenedproducts." 8. Section 3.1 ofRule 4693 defines "bakeryoven" as: "[A]n enclosed compartment supplied withheat, typically from the combustion ofnatural gas, used to bake bread, buns and rolls

...." 9. Section 3.4 ofRule 4693 defines "leaven" as: "[A] rise in the dough caused

... a fermentationproducing agent such as yeast."

1 Ground-level ozone is formed when volatile organic compounds ("VOCs") react with nitrogen oxides ("NOx") in the presence ofsunlight. As precursors to ozone, VOCs are regulatedpollutants. 210. Section 3.5 ofRule 4693 defines a "major source" as defined in Rule 2201 (New and Modified Stationary Source Review Rule). Section 3.25 ofRule 2201 defines a major source as one having a potential to emit greater than 50,000 pounds ofVOCs annually. Section 3.36 ofRule 2201 defines a "stationary source" as "anybuilding, structure, facility, orinstallation which emits ormay emit any affected pollutant [defined as including VOCs, per Rule 2201, section 3.4] directly or as a fugitive emission." 11. Section 3.2 ofRule 4693 defines an "existing Oven" as: "[A]n oven that was constructed and commenced operation prior to July 1, 2002." 12. Section 5.0 ofRule 4693 requires that "noperson shall operate ... [an] existing bakeryunless the following standards are met: a) The collected emissions are vented to an approved emission collection system. b) The collected emissions are vented to an approved emission control device, which has a control efficiency ofat least 95 percent .... " FINDINGS OF FACT 13. The Facility is a commercial bakery facility located at 1831 S. Stockton Street, Lodi, California. The Facilityhas existed at this location since at least 1997. The Facilityis capable ofoperating 24 hours per day, 7 days perweek, 52 weeks per year. 14. Until November 2006, the Facilitywas ownedbythe Knutson FamilyTrust and several charitable organizations. In November 2006, ownership and operation ofthe Facilitywas transferred to Ralcorp Holdings, Inc. Currently, the Facilityis owned and operated byRalcorp Frozen BakeryProducts, Inc. ("RFBP"), a division ofRalcorp Holdings, Inc. 15. The Facilityoperates "bakery ovens" as that term is defined in Rule 4693 and permitted in Condition 10 ofDistrict permitN-1933-4-1.



### 316. On or about August 12,2009, RFBP submitted an application for a permitto operate to the District ("PermitApplication"). 17. RFBP's Permit Application stated that the Facility operates three natural gas fired bakery ovens, one cake oven, and a boiler rated at 4.95 MMBtu. 18. RFBP's PermitApplication states thatthe Facilitymakes bakedbreads. The bread dough uses yeast for sandwich bread and levain for artisan breads. VOCs are emitted when thebread is baked. 19. RFBP's Permit Application states that the Facility's potential to emit VOCs is 124.4 tpy. RFBP's Permit Application also states that the Facility emitted 31.24 tons ofVOCs in 2008 from the bread products. 20. RFBP's Permit Application states that the Facilityhas no air pollution controls. 21. EPA inspected the Facility on July 27,2009. EPA's inspection included a comprehensive walkthrough ofthe Facility, accompaniedbyFacility employees, for the purpose offamiliarizing EPA enforcement personnel with the Facility'sprocesses and equipment. 22. EPA's inspectors were shown and observed the Facility's bakeryovens. Based ontheir visual observations, EPA's inspectors were able to determine that emissions from the Facility's "bakery ovens" are not vented to an approved emission control device. FINDING OF VIOLATION Finding ofFailure to Comply with Rule 4693 23. The Facilityis a major source ofair pollution, as that term is defined in SNAPCD Rules 2201 and 4693 because ithas the potential to emit more than the 50,000 pounds per year ofVOCs. 24. The Facility is subject to the requirements ofRule 4693 because itis a major source operating a bakery

oven. 25. The Facilityhas been in violation ofRule 4693 since at leastApril 26, 2004, because it does not vent emissions from the bakery ovens to approved emission control devices.



### 426. The Facilityremains and will continue to be in violation ofRule 4693 until itproperlyvents emissions from the bakeryovens to approved emission control devices. NOTICE OF VIOLATION Notice is given to Cottage Bakery, Inc. that the Administrator ofthe United States Environmental Protection Agency, by authority duly delegated to the undersigned, finds that Cottage Bakery, Inc. is in violation ofsection 110 ofthe Act, the California SIP, and SNAPCD Rule 4693, as set forth inthe Finding ofViolation. ENFORCEMENT Section 113(a)(1) ofthe Actprovides that when anyperson has violated anyrequirenient or prohibition ofan applicable implementationplan orpermit, EPA may: issue an orderrequiring compliance with the requirements orprohibition ofsuch implementation plan orpermit, or

I issue an administrativepenaltyorderpursuantto section 113( d) for civil administrative penalties ofup to $37,500per day ofviolation, or bring a civil action pursuant to section 113(b) for injunctive reliefand!orcivil penalties of not more than $37,500 per day for each violation. Furthermore, ifa personknowingly violates anyrequirements ofan applicable implementation plan more than 30 days after notification ofviolation, section 113(c) provides for criminal penalties or imprisonment, orboth. Under section 306(a) ofthe Act, the regulations promulgated thereunder (40 C.F.R. Part 15), and Executive Order 11738, facilities to be used in federal contracts, grants, and loans mustbe in full compliance with the Act and all regulations promulgated pursuant to it. Violations ofthe Actmayresult in the facility being declared ineligible for participation in anyfederal contract, grant, orloan.



### 5PENALTY ASSESSMENT CRITERIA Section 113(e)(1) ofthe Act states that the Administrator or the court, as appropriate, shall, in determining the amount ofanypenaltyto be assessed, take into consideration (in addition to such other factors asjustice mayrequire) the size ofthe business, the economic impact ofthe penaltyon the business, the violator's full compliance history and good faith efforts to comply, the duration ofthe violation as established by any credible evidence (including evidence other than the applicable test method), payment bythe violator ofpenalties previously assessed for the same violation, the economic benefit of noncompliance, and the seriousness ofthe violation. Section 113(e)(2) ofthe Act allows the Administrator orthe court to assess a penalty for each day ofviolation. For the purposes ofdetermining the number ofdays ofviolation, where the EPA makes a prima facie showing that the conduct or events giving rise to this violation are likelyto have continued or recurred past the date ofthis NOV, the days ofviolation shall bepresumed to include the date ofthis NOV and each and every daythereafter until the violator establishes that continuous compliance has been achieved, except to the extent that the violator can prove bythe preponderance ofthe evidence that there

were intervening days during which no violation occurred or that the violation was not continuing in nature.

OPPORTUNITY FOR CONFERENCE Cottage Bakerymay, upon request, confer with EPA. The conference will enable Cottage Bakery to present evidence bearing onthe finding ofviolation, the nature ofthe violation, and any efforts it may have taken orproposes to take to achieve compliance. Cottage Bakeryhas the right to berepresented by counsel. A request for a conference with EPA mustbemade within ten (10) working days ofreceipt of



### 6this NOV. The request for a conference or other inquiries concerning the NOV should bemade in writing to:

Kara Christenson Office ofRegional Counsel (ORC-2) U.S. Environmental Protection Agency 75 Hawthorne Street San Francisco, California 94105 (415) 972-3881

# /{Uw~ Deborah Jordan Director, Air Division



### 7UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 9

In the Matter of: ) Docket No. R9-09-19 ) ) Finding and Notice ofViolation Cottage Bakery, Inc. ) Lodi, California ) ) Proceeding Under Section 113(a), )**~C~le=a=n~A~i~r~A~c=t,~A~s~A~m~e~nd~e~d~** _____________ )

This Finding and Notice ofViolation ("NOV") is issued to Cottage Bakery, Inc. ("Cottage Bakery") for violations ofthe Clean AirAct ("CAA" or "Act") as amended, 42 U.S.C. §§ 7401-7671q, at its manufacturing facility located in Lodi (San Joaquin County), California (the "Facility"). The Facility is located within thejurisdiction ofthe San Joaquin Valley Air Pollution Control District ("SJVAPCD" or "District"). Section 113(a)(l) ofthe Act requires the EPA Administrator to notify a person in violation of

a state implementation plan. The authority to issue NOVs has been delegated to the Director ofthe Air Division for EPA, Region IX. GENERAL STATUTORY AND REGULATORY BACKGROUND 1. Section llO(a) ofthe Actrequires that all states adopt state implementation plans ("SIPs") that provide for the implementation, maintenance and enforcement ofprimary and secondary air quality standards. 42 U.S.C. §741O(a). 2. The Facility is located within thejurisdiction ofthe San Joaquin Valley Air Pollution Control District ("SJV APCD" or "District").3. A person's failure to comply with any approved regulatory provision ofa SIP renders the person subject to enforcement under section 113 ofthe Act. 42 U.S.c. §7413(a)(1); 40 C.F.R. §52.23. SJV APCD Rule 2010 Permits Required 4. In accordance with section 110 ofthe Act, EPA has approved Rule 20lO ("Permits Required"), as adopted on December 17, 1992, into SJVAPCD's portion ofthe California SIP. 64 Fed. Reg. 39920 (July 23, 1999). 5. Section 3.0 ofRule 20lO requires any person installing equipment that emits air contaminants to first obtain an Authority to Construct ("ATC") permit from the District. 6. Section 4.0 ofRule 20lO requires any person operating equipment that emits air contaminants to first obtain a Permit to Operate ("PTO") from the District. SJVAPCD Rule 2201 New and Modified Stationary Source Review Rule 7. In accordance with section 110 ofthe Act, EPA has approved Rule 2201 ("New and Modified Stationary Source Review Rule"), as adopted on December 19, 2002, into SJVAPCD's portion ofthe California SIP. 69 Fed. Reg. 27837 (May 17, 2004). 8. Section 4.0 ofRule 2201 requires "BestAvailable Control Technology" ("BACT"), on a pollutant-bypollutant and emissions unit-by-emissions unit basis, for "anew emissions unit with a potential to emit greater than 2.0 pounds per day." 9. Section 3.9 ofRule 2201 defines BACT as the most stringent emission limitation or control technique that has been achieved in practice orrequired by any SIP for the same class or category as the source. lO. Section 4.5.3 ofRule 2201 requires offsets, on a pollutant-by-pollutant and emissions unit-byemissions unit basis, for facility modifications that increase VOC emissions by more than 20,000 pounds peryear.



### 2FINDINGS OF FACT 11. The Facility is a commercial bakery facility located at 1831 S. Stockton Street, Lodi, California. The Facility has existed at this location since at least 1997. TheFacility is capable ofoperating 24 hours per day, 7 days per week, 52 weeks peryear. 12. Until November 2006, the Facility was owned by the Knutson Family Trust and several charitable organizations. In November 2006, ownership and operation ofthe Facility was transferred to Ralcorp Holdings, Inc. Currently, the Facility is owned and operated by Ralcorp Frozen Bakery Products, Inc. ("RFBP"), a division ofRalcorp Holdings, Inc. 13. Pursuant to its authority under section 114 ofthe Act, EPA sent a letter dated April 20, 2009 to Ralcorp Holdings, Inc. requesting information regarding the Facility's compliance with the Act. 14. On or about June 24,2009, Ralcorp submitted its response to EPA's section 114 information request ("Response to EPA's Information Request"). Ralcorp's Response to EPA's Information Request included a document entitled, "CottageBakery, Lodi, California, List ofFlavorings." 15. On or about August 12, 2009, RFBP submitted an application for a permit to operate to the District ("Permit Application").RFBP's Permit Application stated that the Facility operates three natural gasfired baking ovens ("Baking Ovens") and natural gas-fired cake oven ("Cake Oven"). 1 16. RFBP's Permit Application states that the Facility makes baked breads and cakes. The Baking Ovens emit VOCs as a result ofthe use ofyeast and / or levain as leavening agents. The Cake Oven emits VOCs as a result ofthe use offlavorings that contain ethanol, and propylene glycol.2 17. Ralcorp's Response to EPA's Information Request and RFBP's Permit Application contain information relevant to the year ofinstallation and PTE for VOCs ofthe ovens:

1 The Facility also has oneboiler (rated at 4.95 MMBtu) for which RFBP submitted a form entitled, "Supplemental Application for**Pe~t-Exempt** Equipment Registration for Rule 4307 Units." 2 The ovens also emit small amounts ofVOCs as the result ofthe combustion ofnatural gas. 

### 3EMISSION UNIT YEAR INSTALLED PTEVOCs Baking Oven #1 1997 31.00 tons per year Baking Oven #2 2003 46.56 tons peryear Baking Oven #3 2006 46.56 tons peryear Cake Oven 1997 7.73 pounds per day

18. RFBP's Permit Application states that the Facility's potential to emit VOCs is 124.4 tpy. RFBP's Permit Application also states that the Facility emitted 31.24 tons ofVOCs in 2008. 19. RFBP's Permit Application states that the Facility has no permitted emission units. 20. RFBP's Permit Application states that the Facility has no airpollution controls. FINDING OF VIOLATION Finding ofFailure to Comply with Rule 2010 21. The Facility is in violation ofSections 3.0 and 4.0 ofRule 2010 because it failed to comply with Rule 2010's requirements to obtain ATCs and PTOs when it installed and operated equipment that emits air contaminants. Specifically, the Facility violated Sections 3.0 and 4.0 ofRule 2010 when it installed and commenced operation ofthe Baking Ovens in 1997,2003, and 2006 and the Cake Oven in 1997. 22. The Facility remains and will continue to be in violation ofRule 2010 until it obtains valid permits for the ovens. Finding ofFailure to Comply with Rule 2201 23. The Facility is in violation ofSection 4.0 ofRule 2201 because it failed to comply with Rule 2201's BACTrequirements when itinstalled new emissions units with the potential to emit more than 2.0 pounds per day. Specifically, the Facility triggered Rule 2201's BACTrequirement when it installed each oven in 1997,2003, and 2006.



### 424. The Facility is in violation ofSection 4.5.3 ofRule 2201 because itfailed to obtain offsets when it installed each oven in 1997,2003, and 2006 with a post-project PTE above 20,000 pounds per year. 25. The Facility remains and will continue to be in violation ofRule 2201 until it installs and operates BACT and obtains offsets and valid permits for the ovens. NOTICE OF VIOLATION Notice is given to Cottage Bakery, Inc. that the Administrator ofthe United States Environmental Protection Agency, by authority duly delegated to the undersigned, finds that Cottage Bakery, Inc. is in violation ofsection 110 ofthe Act, the California SIP, and SJV APCD Rules 2010 and 2201, as set forth in the Finding ofViolation. ENFORCEMENT Section 113(a)(I) ofthe Act provides that when any person has violated any requirement or prohibition ofan applicable implementation plan orpermit, EPA may: issue an order reqll:iring compliance with the requirements orprohibition of such implementation plan orpermit, or issue an administrative penalty orderpursuant to section 113(d) for civil administrative penalties ofup to $37,500 perday ofviolation, or bring a civil action pursuant to section 113(b) for injunctive reliefand/or civil penalties of not more than $37,500 per day for each violation. Furthermore, ifa person knowingly violates any requirements ofan applicable implementation plan more than 30 days after notification ofviolation, section 113(c) provides for criminal penalties or imprisonment, orboth. Under section 306(a) ofthe Act, the regulations promulgated thereunder (40 C.F.R. Part 15), and Executive Order 11738, facilities to beused in federal contracts, grants, and loans must be in full compliance with the Act and all regulations promulgated pursuant to it. Violations ofthe Act may result in



### 5the facility being declared ineligible for participation in any federal contract, grant, orloan. PENALTY ASSESSMENT CRITERIA Section 113(e)(1) ofthe Act states that the Administrator orthe court, as appropriate, shall, in determining the amount ofany penalty to be assessed, take into consideration (in addition to such other factors asjustice may require) the size ofthe business, the economic impact ofthe penalty on the business, the violator's full compliance history and good faith efforts to comply, the duration ofthe violation as established by any credible evidence (including evidence otherthan the applicable test method), payment by the violator ofpenalties previously assessed for the same violation, the economic benefit of noncompliance, and the seriousness ofthe violation. Section 113(e)(2) ofthe Act allows the Administrator orthe court to assess a penalty for each day ofviolation. For the purposes ofdetermining the number ofdays ofviolation, where the EPA makes a prima facie showing thatthe conduct or events giving rise to this violation are likely to have continued or recurred past the date ofthis NOV, the days ofviolation shall bepresumed to include the date ofthis NOV and each and every day thereafter until the violator establishes that continuous compliance has been achieved, except to the extent that the violator can prove by the preponderance ofthe evidence that there

were intervening days during which no violation occurred orthat the violation was not continuing in nature. OPPORTUNITY FOR CONFERENCE Cottage Bakery may, upon request, confer with EPA. The conference will enable Cottage Bakery to present evidence bearing on the finding ofviolation, the nature ofthe violation, and any efforts it may have taken orproposes to take to achieve compliance. Cottage Bakery has the right to berepresented by counsel. A request for a conference with EPA must be made within ten (10) working days ofreceipt of



### 6this NOV. The request for a conference orother inquiries concerning the NOV should be made in writing to: Kara Christenson Office ofRegional Counsel (ORC-2) U.S. Environmental Protection Agency 75 Hawthorne Street San Francisco, California 94105 (415) 972-3881



### 7 "