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A facility with an air quality permit must comply with all the conditions of that permit and demonstrate its compliance on an on-going basis.  Unfortunately, no matter how diligently the facility and corporate staff strives to assure continuous compliance, unexpected compliance challenges can occur.  For example, new equipment fails the emissions guarantees provided by equipment vendors; new staff or operators, without the proper training, may miss discrete monitoring or recordkeeping requirements; regulatory reports Legal scales_gavel2with due dates may get turned in late; accidents can happen that sometimes cause excess air emissions; and physical changes or changes in the method of operation may occur that were assumed to be exempt but may have required more detailed registration or permitting.  As a result of these or other situations, the facility may become subject to allegations of non-compliance by a regulatory agency. 

When challenged with allegations of non-compliance, common concerns may include:

  • Sources of non-compliance allegations
  • Costs to resolve a non-compliance notice
  • Responding to a non-compliance allegation
  • Minimizing costs of a non-compliance allegation
  • Preventing a recurrence of non-compliance
Sources of Non-Compliance Allegations

The Compliance Division of the local air quality agency and the U.S. Environmental Protection Agency (EPA) are responsible for assuring compliance with air quality permits.  They perform this duty by utilizing field inspectors, reviewing reports submitted by a facility (e.g., excess emissions reports, annual compliance certifications, etc.), and observing performance tests required by the air quality permit.  If, in the course of its review, the Compliance Division observes suspected non-compliance, it may issue certain notices to the facility or refer the case to the Enforcement Division.  Some states do not have any statutes of limitations related to non-compliance.  Therefore, even historic events that may have occurred under different owners of an industrial facility can become the subject of enforcement action.  There are three general types of notices of non-compliance as described below.

NTCs or NOCs

Some agencies will issue a Notice to Correct (NTC), or Notice of Opportunity to Correct (NOC) through their Compliance Division before issuing a formal Notice of Violation (NOV).  These notices are usually issued for minor infractions that are not considered willful, intentional, or repetitive, and give the facility the opportunity to provide a written correction plan.  Examples of scenarios where an NTC or NOC may be issued include failure to report a change in ownership, failure to maintain a copy of the permit on-site, and failure to provide notice of a source test date.  No response or an inappropriate response from the facility may lead the agency to issue an NOV. 1

An NOV is usually issued for more serious infractions and when penalties are sought.  NOVs are typically handled by the agency’s Enforcement Division.  Some agencies may provide the facility with an opportunity to respond to the NOV and either dispute the NOV (either factually or legally) or describe any corrective action taken in response to the allegations of non-compliance in the NOV.

In general, any NOV issued to major sources or synthetic minor sources relating to federal requirements (such as a Title V or PSD permit, NSPS or MACT standard, etc.) must be reported to EPA.  Once reported to EPA, the NOV is labeled as a High Priority Violation (HPV) which provides EPA with grounds to pursue additional and separate enforcement against the facility.  EPA can then seek monetary penalties beyond those sought by the local agency.

Costs to Resolve a Non-Compliance Notice

In general, a monetary penalty is not associated with an NTC or NOC.  However, civil penalties are usually sought for NOVs.  Most regulatory agencies attempt to recover, at a minimum, the “economic benefit” enjoyed by the facility as a result of its non-compliance.  Such “economic benefit” may include any delayed and/or avoided costs to the facility (such as the cost of implementing controls) as well as profits directly associated with the non-compliance.  Tools used to estimate the “economic benefit” include EPA’s BEN (short for “benefit”) computer model.  In addition, a “gravity component” is added to the perceived economic benefit to make the cost of non-compliance higher than the cost of compliance.

The gravity component accounts for the “potential for harm” and “extent of deviation” (or seriousness) for the allegation.  Factors that affect the “potential for harm” include:

  • Toxicity of the pollutant
  • Risk to the environment
  • Risk to the nearby population
  • Size of violating entity

The “potential for harm” is then ranked as major, moderate, or minor as is the “extent of the deviation.”  A matrix of nine possible outcomes (major, moderate, or minor potential for harm crossed with major, moderate, or minor extent of deviation) is then used to classify the gravity component of the civil penalty.

The Enforcement Division determines the amount of civil penalties associated with NOVs and usually seeks to settle the allegations with the facility through payment of the penalties without going to court.  For most state and local agencies, the statutory maximum penalty is $10,000 per day, per violation.  However, for EPA, the statutory maximum (per 40 CFR 19.4) is $32,500 per day, per violation.  Once the penalty and other NOV-related negotiations between the facility and the agency are completed, the facility enters into an Order of Abatement by Consent, an Agreed Order, or a Consent Decree to finalize the agreement.  These legally binding documents specify the penalty, any needed corrective actions, and legal ramifications.  If the facility and the agency cannot reach an agreement and execute such a document, the situation may be referred to a court with legal jurisdiction to initiate trial proceedings.

Since a settlement is commonly less than the cost of potential trial proceedings, most companies prefer to negotiate a settlement with the respective agencies.  However, the cost of a non-compliance allegation can be significant.  In some cases, these amounts exceed the annual revenue of the affected facilities.

Responding to a Non-Compliance Allegation


The following are recommendations to consider when analyzing and responding
to allegations of non-compliance and agency panels

Consider engaging legal counsel and technical support.
Some elements of the non-compliance negotiations may be streamlined by engaging legal counsel and technical support.Examples of legal counsel support include:

  • Ability to retrieve penalty calculations worksheets from the agency (which in some cases may be deemed confidential)
  • Ability to negotiate rule and statute requirements

Examples of technical support include:

  • Expedited compilation and review of facility data, permits, retroactive applicability/ inapplicability assessments, etc., allowing facility staff to maintain focus on day-to-day operations
  • Air dispersion modeling (discussed later in more detail)
  • Revision of air quality permits to incorporate additional operational flexibility, refined compliance provisions,  or expanded allowable emissions
  • Analysis of potential Supplemental Environmental Projects (SEPs) including feasibility, costs, schedules, and deliverables
  • Quick responses to stakeholders questions and comments as well as agency requests

Ask for the supporting documentation if it was not provided.
An NOV is usually accompanied by a report that describes where, when, and how the alleged non-compliance occurred.  The report may also contain statements made by the facility’s staff as well as other evidence (such as source test data, videos, and compliance reports) that were relevant to the agency’s finding.  In addition, if civil penalties are sought, the agency will likely have developed a penalty calculation sheet containing items such as the source’s efforts and timeliness to correct the non-compliance, the source’s previous compliance history, and the calculated approximate economic benefit.

This documentation is critical in determining the facts surrounding the allegation and developing a strategy for negotiating penalties.  In some cases, this documentation may be considered confidential and may only be released to legal counsel representing the facility through certain legal proceedings.

Clarify the facts surrounding the allegation(s).

In some cases, there may be a misunderstanding of the facts surrounding an allegation.  For example:

  • An agency inspector might have been looking for water sprays at the wrong side of a crusher
  • The equipment alleged to be operating without a permit is portable and qualifie for the “nonroad engine” permit exclusion available in some states
  • The excess production allegation based on agency hours of operations review is not supported by a review of the facility’s volume of material sold
  • The allegation was based on missing maintenance logs that were subsequently located in a different part of the facility

Determine if you are being penalized twice for the same allegation.
In some cases, a potential non-compliance event may challenge regulatory requirements.
For example, if the agency alleges that monitoring and associated reporting was not performed as specified in the permit, the allegation may specify violating a reporting requirement and violating an emission limitation which is based on the reported monitoring.  In this case, the action of failing to monitor gives rise to another violation.  However, it would be inappropriate to be penalized twice.

Enforcement Success Stories

The following are real-world examples of companies that worked closely with Trinity and utilized a number of the recommended strategies to negotiate and reduce civil penalties associated with allegations of non-compliance.

  • A facility with an initial civil penalties estimate of $6.5 million was able to settle for $100,000 (a 98.5% penalty reduction) by demonstrating insignificant impacts to the environment using technical emission calculations, and an inability to pay using the EPA ABEL model and the past 2-years of IRS returns.
  • A company with multiple facilities subject to an initial civil penalties estimate of $2.8 million was able to settle for $750,000 (a 73% penalty reduction) by using air dispersion modeling and researching the factual, legal, and technical basis of each allegation.

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Minimizing Costs of a Non-Compliance Allegation

The following recommended strategies may reduce the magnitude of any civil penalties associated with allegations of non-compliance.

Respond quickly.

The degree of cooperation and urgency that is exhibited by the accused to the agency are considered in determining civil penalties associated with an allegation.  A quick response may reduce the magnitude of the “adjustments” that are used to determine such penalties.

Perform an air dispersion modeling analysis.

As discussed above, allegations that involve excess releases of nonattainment pollutants (e.g., VOC or NOx in an ozone nonattainment area), or toxic pollutants typically have a significant gravity component in the penalty calculation.  In addition, allegations of air quality releases that may threaten a local or federal ambient air quality standard will also have a significant gravity component in the penalty calculation.  Air dispersion modeling, using an appropriate EPA-approved model, is a technique that can be used to determine if such standards have been threatened.  The modeler would compare the conservative results of these models to the regulatory thresholds to determine whether a violation is likely.  A favorable analysis can demonstrate that the alleged non-compliance had no significant impacts to regulatory ambient air thresholds, and no significant impact on human health or the environment.

Consider the “ability to pay” demonstration.
EPA policy states that the determination of penalty amounts should consider the facility’s ability to pay.  EPA policy allows settlement for less than the economic benefit of non-compliance if “removal of the economic benefit would result in plant closings, bankruptcy, or other extreme financial burden, and there is an important public interest in allowing the firm to continue in business.”

EPA and some state/local agencies utilize the ABEL model to make a determination of ability to pay. The ABEL model utilizes IRS tax return data in its determination.  If the company can show negative returns for the past two years, the ABEL model may indicate an inability to pay. Note that most agencies will try to define the boundaries of the legal entity in question to include all U.S. or global operations.

Consider Supplemental Environmental Projects (SEPs).

Implementing a SEP allows facilities to fully comply with the enforcement process while voluntarily taking a positive step toward enhanced protection and improvement of the environment in or near the community where the alleged violation took place.  If a SEP is approved, a portion of the monetary fines (anywhere from 30 to 80%) may be offset.  For example, a company with a $30,000 fine may offset $15,000 of the penalty by spending the same amount on a SEP, qualifying for 50% monetary fines reduction.  The remaining $15,000 must be paid to the agency.  A SEP may provide the facility with the ability to spread associated expenditures over time rather than making a single, large payment to the agency.

A SEP must be environmentally beneficial, be done as a result of a settlement, and exceed what is required for compliance.  In some cases, facilities have been able to successfully negotiate the implementation of electronic Environmental Management Information Systems (EMIS) solutions as part of their SEPs.  The EMIS would allow these facilities to manage their compliance tasks more efficiently and effectively and reduce the likelihood of a reccurrence of the events that lead to non-compliance.

For the SEP approval process to be completed, the facility must resolve any dispute concerning the amount of the proposed monetary penalty and be willing to sign an Agreed Order or Consent Decree.  Written provisions requiring reporting on the actual quantified benefits achieved during project implementation (such as pounds of reduction in NOx) will be included in any Agreed Orderor Consent Decree with SEPs.  Such reports (usually quarterly) should itemize expenditures and indicate the status of the project with supporting documentation such as receipts and photographs.  At the completion of the SEP, a facility must submit a detailed report verifying completion of the project and supplying data regarding benefits to the environment.

Preventing a Recurrence of Non-Compliance

To reduce the likelihood of a recurrence, consider performing internal compliance audits of your operations on a periodic basis (e.g., once a year) and invoke the EPA Audit Policy and the local agency audit act if one is available.  These policies usually provide incentives to voluntarily discover, promptly disclose, and expeditiously correct compliance challenges.  Such incentives include the elimination or substantial reduction of the gravity component of civil penalties and a determination not to recommend criminal prosecution of the disclosing entity.  EPA also has recently announced additional incentives for new owners of industrial operations.  These audits will also help identify, address, and resolve compliance challenges that may exist at the facility.

Another consideration is amending existing air quality permits to introduce additional operational flexibility, refine compliance provisions, or expand allowable emissions.  The revised permits would incorporate some of the findings and conclusions of the non-compliance allegation research.
Finally, a facility may consider implementing an electronic Environmental Management Information System (EMIS).  An EMIS can enable the facility to electronically track and monitor compliance items, request tasks to be completed by facility staff, generate agency reports, and more.  An EMIS can dramatically reduce the likelihood of a recurrence of non-compliance allegations.

For more information on how to respond to allegations of non-compliance, contact Eddie Al-Rayes at  or (480) 222-4571, or call your nearest Trinity office at 800-229-6655.

1Note that in some states (such as Texas), notices for minor infractions are referred to as NOVs, and notices involving the Enforcement Division are referred to as Notices of Enforcement (NOEs).