DOCUMENT RESUME

07385 - [C29680471

More Effective Action by the Environmental Protection AgencyNeeded To Enforce Industrial Compliance with Water PollutionControl Discharge Permits. CED-78-182; B-166506. October 17,1978. 29 pp.

Report to the Congress; by Elmer B. Staats, Comptroller General.

Issue Area: Environmental Protection Programs: Effectiveness ofRegulatory Strategies (2208).

Contact: Community and Economic Development Div,Budget Function: Natural Resources, Environment, and Energy:

Pollution Control and Abatement (304).Organization Concerned: Environmental Protection Agency.Congressional Relevace: House Committee on Public Works and

Transportation; Senate Committee on Enviroment and PublicWcrks; Congress.

Authority: Clean ater Act, as amended (P.L. 92-500; 33 U.S.C.1251; 33 U.S.C. 362). Clean Air Act of 1977 (P.L. 95-95).

In a comprehensive effort to clean up the ation'swaterways, either the Environmentai Protection Agency (EPA) orStates with EPA-approved programs issue permits to bothindustrial And other source dischargers. These permits limit theamount of pollutants that may be discharged into waterways.After an industrial discharge permit is issued, EPA or the Stateis responsible for insuring that dischargers comply with permitconditions. Findings/Cunclusions: A review of discharge reportsfiled by 165 agencies indicated: widespzead and frequentnoncompliance with permit conditions, frequent failure to submitindustrial self-aonitoring reports which could concealadditional violations, and widespread failure to meet requireddischarge standards. Such noncompliance with permit conditions,includin( violations of toxic-substances limits, underlines theneed for Amproved compliance monitoring. Although a strongenforcement program is necessary to promote compliance, EPAenforcement actions usually lack clout. Except for referringviolators to the Justice Department and/or barring them fromreceiving Federal contracts, grants, or loans, EPA cannotpenalize the violator economically. Justice Departmentreferrals, however, are time-consuming, complex, and expensive,and the results are unpredictable. Since 1975, EPA has been ableto bar violators from Federal contracts, but this is not doneoften. Recommendations: The Administrator of EPA should: definewhat constitutes a ajor inibstrial discharger and determine thecumulative effects of oaior permittees' pollution; increase itssampliLg inspection coverage; provide priorities and guidancefor identifying and resolving the most significant adjudicatoryhearings; make more ffective use of existing enforcementmechanisms; amend the agency's regulation to lower the amount ofexempt contracts, loans, and grants; and periodically evaluatethe adequacy and timeliness of existing enforcement mechanisms

and, if necessary, request that the ongress provide EPA withthe authority to administratively assess penalties againstindustrial permit violators. (RRS)

BY THE COMPTROLLER GENERAL

Report To The CongressOF THE UNITED STAiES

More Effective Action By TheEnvironmental Protection AgencyNeedad To Enforce industrialCompliance With Water PollutionControl Discharge PermitsCleaning up the Nation's waterways de-pends to a large extent on compliance byindustry with water discharge permitswhich specify the amount of pollutantswhich may be discharged. GAO found sig-nificant noncompliance with permit condi-tions, including failure by some industrialfacilities to construct required abatementfacilities.

The Agency's efforts to insure timelycompliance have been hampered by limit-ed review mechanisms and enforcementactions.

The Agency should improve its use ofcompliance and enforcement mechanismsand should evaluate periodically theadequacy and timeliness of existing en-forcement mechanisms. If necessary, theAgency should again request the Congressto provide it with authority to administra-tively assess penalties against industrialpermit violators.

_ ', s2~-

ou%1P CED-78-132lCCoU$~ OCTOBER 17, 1978

COMPT'OLLJR GENERAL OP TH E UNITlED FeATWAUHINITON, .C. 346

B-166506

To the President of the Senate and theSpeaker of the House of Representatives

This report discusses problems experienced by the EnvironmentalProtection Agency in controlling industrial water pollution.

Signif!4rnt industrial noncompliance with water pollutant dischargepermits underlines the need for stronger compliance and enforcement action.However, the Agency's effort3 to insure timely compliance have beenhampered by inadequate monitoring and enforcement mechanisms and actions.

We made our review pursuant to the Budget ard Accounting Act, 1921(31 U.S.C. 53), and the Accounting and Auditing Act of 1950 (31 U.S.L. 67).

We are sending copies of this report to the Director, Office ofManagement and Budget; the Chairman, Council on Environmental Qualityand the Admin'strator, Environmental Protection Agency.

Comptroller Generalof the United States

COMPTROLLER GENERAL'S MORE EFFECTIVE ACTION Y THEREPORT TO THE CONGRESS ENVIRONMENTAL PROTECTIONAGENCY NEEDED TO ENFORCEINDUSTRIAL COMPLIANCE WITHWATER POLLUTION CONTROLDISCHARGE PERMITS

D I GEST

Success in clearing up the Nation's water-ways depends to a large extent upon theEnvironmental Protection Agency'senforcement of permits issued to industrialfacilities to discharge wastewater intorivers and streams.

A strong enforcement program is necessaryto promote compliance with its regulationsunder the law but the Agency'3 enforcementactions usually lack clout. The Agency'senforcement of industrial permits needsstrengthening.

GAO's review of discharge reports preparedby 165 facilities--called "permittees" bythe Agency--disclosed a high degree of non-compliance with discharge limitations.About 55 percent of the 165 permitteesfailed to comply with one or more dischargelimits during a 15-month period. Moreover,51 percent of these violators failed tocomply in 5 or more months of a 15-monthperiod ending Dece;,ber 31, 1977. (See p. 4.)Sampling inspections by the EnvironmentalProtection Agency also disclosed frequentnoncompliance. More than 45 percent ofthe inspections in one region and more than20 percent of the inspections in anotherregion revealed one or more dischargeviolations. (See p. 6.)

Some instances of noncompliance involvedsignificant violations of permit limita-tions for toxic substances. For example,one permittee discharged once a month for5 consecut ie months 98 or more pounds of

CED-78-182Tar in. Jpon removal, the report iCOW date should be noted hereonr

cyanide, more than eight times the 11-pound limitation. (See p. 6.)

Permittees also frequently did not submitrequired monitoring reports. Althoughthis is an administrative violation of thepermit conditions, it could conceal moreserious discharge violations. (See p. 6.)

Some permittees classified as majordischargers and many permitteesclassified as minor dischargers also didnot meet required levels of treatment ofdischarges. The Agency estimates that700 of 3,700 major dischargers did notmeet the treatment date of July 1, 1977.GAO found that in one region, the reportednumber of permittee noncompliers was under-stated by more than 140. The Agency alsodid not know how many of the estimated27,000 minor dischargers did not meet thetreatment deadline. GAO found that signi-

ficant minor permittee noncompliance withthe July 1, 1977, treatment requirementsis likely. (See p. 7.)

NEED FOR IMPROVEDCOMPLIANCE MONITORING

Compliance monitoring, the mechanismintended to alert the Agency and Statesto violations of permits, is the key tothe control of industrial water pollution.The Agency's current compliance monitoringactivities may not, however, identifysignificant permit violations because:

-- The Agency has not emphasized monitoringof minor permittees, although it has nouniform criteria as to whether a permitteeshould be classified as a major or minordischarger and it has insufficientevidence as to the cumulative effects oflarge numbers of minor dischargers onoverall water quality. (See pp. 8 to 10.)

-- Sampling inspection coverage is inadequate(See pp. 10 to 13.)

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-- Lengthy adjudicatory hearings restrictthe Agency's monitoring coverage.(See pp. 13 ant 14.)

LACK OF STRONGENFORCEMENT ACTION

Compliance with permit requirements is theultimate goal of the enforcement system.Once a permit is violated, timely, strongenforcement action is necessary to insurefuture compliance. The Agency's enforce-ment response is neither timely nor strongin most cases. (See p. 16.)

The Agency can take various enforcementactions when a permittee does not complywith permit conditions, such as

-- warning letters,

--phone calls,

--administrative orders, and

-- notices of violations.

Potentially more stringent actions includeDepartment of Justice referrals and barringviolators from Federal contracts, grants,or loans. See p. 16.)

Although administrative resolution ispreferred, untimely use of adminis rativeorders often allows permitteef, t violatepermit limits for extended periods oftime. In some cases, administrative ordersare not issued for more than a year afterthe first permit violation occurred.(See p. 18.)

Litigation through the Department of Justicecan be an effective enforcement tool. How-ever, litigation occurs infrequently. TheAgency is reluctant to refer cases due tothe time and complexity involved.(See pp. 18 to 20.)

UIM~hmtt iii

Prohibiting water-polluting facilities fromreceiving Federal contracts, grants, or loansis a stringent enforcement action available.However, despite continued recommendation ofits use, only four facilities have been listedfor water violations since the program'sinception in 15. (See pp. 20 to 22.)

Unlike other Agency regulatory programs andsome State-managed permit programs, the Agencycan not administratively assess monetarypenalties for permit violations. All cas3eswhich warrant a penalty must go through atime-consuming procedure of referral to theDepartment of Justice and the courts. (Seepp. 23 to 25.)

RECOMMENDATIONS

The Administrator, Environmental ProtectionAgency, should:

-- Define what constitutes a major industrialdischarger and determine the cumulativeeffects of minor permittees' pollution.(See p. 14.)

-- Increase its sampling inspection coverageincluding requiring followup inspections.(See p. 15.)

-- Provide priorities and guidance for iden-tifying and resolving the most significantadjudicatory hearings. (See p. 15.)

-- Make more effective use of existingenforcement mechanisms. (See p. 28.)

-- Amend the Agency's regulation to lower theamount of exempt contracts, loans, andgrants from $100,000 to $10,000 to increasethe impact of listing. (See p. 28.)

-- Periodically evaluate the adequacy and time-liness of existing enforcement mechanismsand, if necessary, request again that theCongress provide the Agency with theauthority to administratively assesspenalities against industrial permitviolators. (See p. 29.)

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AGENCY COMMENTS

To expedite issuance of the report, formalwritten comments were not obtained; however,the report was discussed with cognizantAgency officials and their comments areincluded. The Agency generally agreed withthe report recommendations.

Agency officials stated that:

-- A new method for classifying major andminor permittees would be set forth indraft regulations in December 1978.

-- Although desirable, increased samplinginspection coverage would be difficultto realize because of staffing limita-tions.

-- The authority to administratively assesspenalities would strengthen the Agency'senforcement responses.

Department of Justice officials reviewedthe rport and said they are in funda-mental agreement with the report.

vIULMW~~~~~~

o n t e n t s

PageDIGEST

CHAPTER

INTRODUCTION 1National Pollutant DischargeElimination System 1

Size of program ;jScope of review 3

2 BETTER MONITORING NEEDED TO DETECTWIDESPREAD NONCOMPLIANCE WITH PEPMITCONDITIONS 4

Significant industrial permitviol r" inns 4

Fre,,l;nt discharge violations 4Report-;q violations may result inunderstatement cof dischargeviolaticns 6

Noncomplianc_ ith abatemertschedules 7

Need for improved compliance monitoringcoverage 8

The definition and effect of minorpermittees need clarification 8

Sampling inspection coverage couldbe improved 10

Adjudicatory hearings are lengthy 13Conclusions 14Recommendations to the Administrator,EPA 14

Agency Comments 15

3 MOREu EFFECTIVE ENFORCEMENT ACTION NEEDEDAGAINST VIOLATORS OF PERMIT CONDITIONS 16

Lack of strong enforcement action 16More timely use of administrative

orders is needed 18Time-consuming referral process 18Infrequent use of the FederalContractor Listing Program 20

Administratively assessed fines couldprovide more effective enforcementaction 23

Present mechanisms are timeconsuming and costly 23

Page

EPA has requested administrativepenalty authority 23

Other EPA and State programs provideadministrative assessmentauthority 24

Need for improved EPA overview ofState-managed programs 25

State noncompliance reports areinadequate 25

State enforcement actions and EPAoverview followup are notaggressive 26

Conclusions 28Recommendations to the Administratot,EPA 28

Agency comments 29

ABBREVIATIONS

EPA Environmental Protection AgencyGAO General Accounting OfficeNEW National Enforcement Investigations CenterNPDES National Pollutant Discharge Elimination SystemOFA Office of Federal ActivitiesQNCR quarterly noncompliance report

CHAPTER 1

INTRODUCTION

Industrial water pollution can contribute significantlyto degradation of the Nation's waterways. Industries, inthe daily routine f doing business, discharge a variety ofpollutants, including, in some cases, toxic substances. Ina comprehensive attempt to clean up the Nation's waterways,either the Environmental Protection Agency (EPA) or Stateswith EPA-anproved programs issue permits to both industrialand other point source dischargers. 1/ These permits limitthe amount of pollutants that may be discharged into water-ways.

If industry does not comply with these permits,recreational waters and potential drinking waters could bepolluted. Industries that do not comply could have an unfaircompetitive advantage over industries that do comply sincethey would be able to postpone the expenditures for con-structing and operating required treatment facilities.

This review was performed as a followup to our reportentitled "Implementing the National Water Po'lution ControlPermit Program: Progress and Problems." 2/ In that report,we stated that permit noncompliance appeared to be wide-spread; however, the program had just been implemented andit was too soon to assess its effectiveness.

NATIONAL POLLUTANT DISCHARGEELIMINATION SYSTEM

The 1972 amendments to the Clean Water Act (Public Law92-500, 33 U.S.C. 1251 et seq.) established the NationalPollutant Discharge Elimination System (NPDES). It rquiredindustrial dischargers to achieve by July 1, 1977, dischargelimitations by applying the best practicable control techno-logy crrently available as defined by the Administrator,EPA, or any more stringent limitations necessary to meetwater quality standards or any other requirements.

1/ According to the Clean Water Act, as amended, (33 U.S.C.1362 (14)) any discernible, confined, and discreteconveyance from which pollutants are or may be discharged.

2/ RED-76-60, February 9, 1975.

1

As amended in 1977, the Clean Water Act gives EPA the

authority to extend the July 1, 1977, deadline untilApril 1, 1979, for noncomplying dischargers that actedin good faith and that made a commitment to secure theresources necessary to meet the treatment requirements.

The NPDES permit program sets ischarge limitationsand insures compliance with these limitations. t isillegal for point source dischargers to discharge ollutantsinto the Nation's navigable waters without an NPODS permit.Dischargers are subject to civil penalties up to $10,000 a

day for violations of permit conditions. Willful or neg-ligent violations could result in fines up to $25,000 a day

and 1 year in prison for the first offense, and u to$50,000 a day and 2 years in prison for subsequent offenses.

Generally, an NPDES permit, which is issued for fixedperiods not exceeding 5 years, specifies (1) dischargeliminations for specific pIollutants or substances, (2)schedules setting forth the type of actions required and

time frames necessary to comply with the discharge limita-tion", (3) requirements for self-monitoring of wastewater

flows and of specified pllutants, and (4) periodicreporting of plant compliance.

SIZE OF PROGRAM

EPA estimated that as of June 1978, more than 45,000

major and minor industrial facilities required oermits. Es'

does not have a clear efinition of a major industrialdischarger. Classification of a facility as a majordischarger may be the result of (1) objective criteria such

as volume of wastewater discharged or tyoe of industry or(2) subjective evaluations such as a personal assessmentthat the facility is a major discharger.

As of June 1978, EPA or States with EPA-approveA

programs have issued approximately 30,000 industrialpermits, as shown below.

Major Minorpermittees permittees Total

EPA-issued permits 2,365 15,234 17,599

State-issued permits 1,263 11,459 12,722

Total 3,628 26,693 30,321

2

According to EPA, most of the 15,000 industrialdischargers yet to receive permits were classified asminor dischargers

SCOPE OF REVIEW

Our review was to determine the adequacy of Federalactivities to identify and take prompt action againstindustrial permit violators. We made our review at EPAheadquarters in Washington, D.C., and in EPA's region II inNew York and its region IV in Atlanta.

We interviewed officials at EPA's headquarters and itsregional offices as well as offtcias in State water pol-lution control agencies or departments in Albany, New York;Hartford, Connecticut; Raleign, North Carolina; Tailahissee,Florida; and Trenton, New Jersey. We also contactedofficials at four U.S. attorneys' offices and three Stateattorneys' offices.

In addition to examining pertinent Federal and Stateagencies' documents, records, and other literature, weanalyzed 58 enforcement actions in EPA regions II and IV.We also reviewed the degree of industrial permit complianceof 165 permittees in Florida, New Jersey, New York, andNorth Carolina. This information was obtained frompermittee-prepared discharge reports maintained by EPAand the cognizant States. The identities o the permitteesreviewed are not reported. We believe such disclosure wouldbe unfair given the large universe of permittees. The useof permittee examples is intended only to indicate theadequacy of Federal compliance and enforcement actions.Also, we did not contact the permittees reviewed.

To expedite issuance of the report, formal, written EPAcomments were not obtained; however, the report was discussedwith cognizant EPA officials and their comments are includedwhere appropriate. In addition, the Department of Justice'sLand and Natural Resources Division also provided informalcomments.

3

CHAP,'ER 2

BETTER MONITORING NEEDED TO DETECT

WIDESPREAD NONCOMPLIANCE WITH

PERMIT CONDITIONS

After an industrial discharge permit is issued, EPA orStates with EPA-approved permit programs are responsible forinsuring that dischargers comply with permit conditions.The effectiveness of the program depends on how successfulEPA and the States are in identifying instances ofnoncompliance and taking appropriate and prompt action.

We found

-- widespread and frequent noncompliance with permitconditions and frequent failure to submit industrialself-monitoring reports which could concealadditional violations, and

-- widespread failure to meet the required July 1, 1977,discharge standards.

Such noncompliance with permit conditions, including viola-tions of toxic substances limits, underlines the need forimproved compliance monitoring coverage.

SIGNIFICANT INDUSTRIAL PERMIT VIOLATIONS

Industrial permit noncompliance includes failing toobserve discharge limits and failing to construct requiredwaste treatment facilities for achieving discharge standards.These failures could result in significant water pollution.Industrial permit noncompliance also includes failing tosubmit required discharge monitoring reports. This is anadministrative violation which could conceal other permitviolations.

Frequent discharge violations

Discharge monitoring reports that were prepared by 165EPA region II and region IV industrial permittees showedwidespread and frequent permit violations. About 55 percentof these 165 permittee3 '-ailed to comply with one or morepermit discharge limitations. In addition, 51 percent ofthese violators failed to comply in 5 or more months of a15-month period ending December 31, 1977.

4

The vio)]tion rate reflects only those effluentviolations which exceeded EPA's technical review criteria.The echnical review criteria is a screening device toinsure that limited professional resources concentrate onthe most significant violations. The criteria consists ofnumerical factors, which, when multiplied by the actualpermit limit, establish a higher violation limit.Discharges exceeding the higher limit are deemed to besignificant violations. The numerical factors var;ydepending on the particular parameter. In some cases--:emperature limits, for example--all deviations from thepermit limit are deemed significant.

It should be noted, however, that screening based onthe criteria does not establish which deviations fromdischarge limits are violations. According to EPA, alldeviations are violations, unless they are specificallyauthorized in he permit. The criteria does not excuserelatively minor violations. Frequency of violatio-sis also important. The criteria defines frequentviolations as those which occur more than once in any fourconsecutive quarters.

The 165 permittees mentioned earlier included State-managed and EPA-managed major and minor permittees. Theresults of our analysis follow.

Total Length o violationsnumber No 1 to 4 5 to 8 9 to 15

Permit type reviewed violations months months months

EPA-managed majordischargers 60 19 (32%) 20 33&) 5 ( d%) 16 (27%)

EPA-managed minordischargers 60 38 (63%) 9 (15%) 5 ( 9%) 8 (13%)

State-managed majordischargers 30 8 (27%) 11 (37%) 6 (20%) 5 (16%)

State-managed minordischargers 15 i0 (67%) 4 (26%) 1 ( 7%) - (-)

Total 165 75 (45%) 44 (27%) 17 (10%) 29 (18%)

Some instances of noncompliance involved significant

violations of permit limitations for toxic substances. Forexample, one permittee discharged once a month for 5 con-secutive months, 98 or more pounds of cyanide--more thaneight times the 11-pound lim tation. In 1 day thepecmittee actually discharged over 340 pounds. In another

case, a permittee discharged 59, 22, 340, 68, and 229pounds of copper over a 5-month period; the daily maximumpermit limitation was 7.8 pounds.

EPA's review of discharge monitoring reports also

disclosed frequent noncompliance. For example, for the3-month period ended December 1977, EPA region II found that

260 of 542 major industrial permittee discharge monitoringreports reviewed contained one or more effluent violations.

EPA sampling inspections disclosed si% iificant non-

compliance with permit conditons. A samplinr inspection,which involves collecting, testing, and analyzing a

permittee's discharge, is intended to (1) determine thepermittee's compliance with permit conditions and (2) verify

the self-monitoring data reported to EPA.

During the 15-month period ended December 31, 1977, EPA

region II conducted 114 sampl 4ng inspections; 54 (47 percent)d'sclosed one or more discharge violations For the same

period, EPA region IV conducted 128 sampling inspections 28

(22 percent) disclosed one or more discharge violations.

Of the 82 violations noted by the sampling inspections,24 involved toxic substances to be regulated under the Clean

Water Act of 1977. In one sample, a permittee discharged715 pounds of phenols--more than seven times the permit

limit. In another case, a permittee discharged 234 pounds

of cyanide--more than eleven times the 20-pound permit limit.

Reporting violations may result inunderstatement of discharge violations

The permit program relies, to a g:eat extent, on

permittee reporting compliance data. f particularimportance is permittee reporting of discharges.

Discharge monitoring reports show, for a given period

of time, the permittee's actual discharge as well as the

permit conditions. Without these reports, EPA officials donot know whether the permittee has complied with permitlimitations. We found that permittees frequently failedto submit the required discharge monitoring reports.

6

Of the 165 permittees we studied, 38 (23 percent)failed to submit one or more required discharge monitoringreports during te 15-month period. Of these 38 permittees(4 were major permittees), 25 failed to submit thereport for 5 or more months.

EPA region I has also found frequent nonsubmissionand/or late submission of discharge monitoring reports.Region II reported that during a 15-month period, approxi-mately 700 EPA-managed permittees either submitted dischargemonitoring reports late or not at all.

Discharge reports are important to the overallpollution control effort; tQaling to submit them is notjust a minor administrative violation. If EPA doesnot have the reports, it does not know if the permitteescomplied with permit conditions. Consequently, theextent of overall compliance with discharge limitationscould be overstated and the degree of water pollutioncaused by industrial sources understated.

Noncompliance with abatement schedules

Prior to the 1977 amendment, the Clean Water Actrequired that all industrial dischargers meet certaindischarge standards by July 1, 1977. In many cases wastetreatment facilities had to be constructed before hesestandards could be met.

In April 1978, EPA reported that 720 permittees, orabout 20 percent of the estimated 3,628 major industrialpermittees, had not met the July 1, 1977, requirements.However, we found that the extent of noncompliance wasunderstated because of an error by one EPA region indetermining the number of major permittees meeting thedischarge requirements. In addition, EPA does not know howmany minor permittees failed to meet the discharge date;therefore, the actual extent of water pollution caused byindustrial sources could be much greater than estimated.

Region II records indicated that EPA underestimatedthe number of permittees failing to meet the deadline. Inregion II our analysis revealed that 206 major industrialpermittees did not meet the July 1, 1977, deadline. Thisfigure is significantly greater than the 64 noncompliersreported by region II. EPA officials stated that region IIwas the only region to miscalculate the number ofnoncompliers.

7

In addition, EPA officials did not know how many ofthe estimated 27,000 minor permittees failed to constructthe facilities necessary to meet the July 1, 1977,discharge standards. Although the degree of pollution

caused by this noncompliance depends on the amountand location of pollutants discharged, it could besubstantial. As dcussed on page 9, little is knownabout the effects o minor permittee discharges onthe Nation's waterways and, therefore, the large numberof minor permittees could have a significant cumulativeeffect on pollutcion of the wterways.

NEED FOR IMPROVED COMPLIAnLCEMONITORING COVERAGE

Compliance monitoring, the mechanism intended to alert

EPA and States with EPA-aoproved programs to permit noncom-pliance, is the key to EPA control of industrial waterpollution. However, EPA's monitoring program may noteffectively identify significant permit violations becauseof

-- the lack of uniform EPA criteria on how permitteesshould be classified,

--insufficient evidence on the cumulative effect ofminor industrial permittees,

-- inadequate sampling inspection coverage, and

-- effective ermits taking too long to becomeenforceable due to lengthy adjudicatory hearings.

If the compliance monitoring program is to be effective,these shortcomings must be overcome.

The definition and effect of minorpermittees need carificaticn

As noted on page 2, EPA has two permit classifications--major and minor permittees. Because of staff limitations,EPA compliance activities emphasize identifying major permitviolators. In its fiscal year 1l78 budget justification,EPA stated there would be no compliance monitoring of orenforcement action against minor permittees. New York andNorth Carolina officials said their EPA-approved programsalso de-emphasize compliance monitoring of minor industrialdischargeLs, but to a lesser extent than EPA.

8

Although the permit classification influences thedegree of compliance activity, EPA has not defined amajor discharger. Therefore, some regional of ices havedeveloped their own definitions. Two regional officeshave developed detailed criteria for classifying permitteesas either major or minor dischargers; however, the twocriteria differ a great deal. For example, in region I amajor discharger is defined as one who discharges a minimumof 10 pounds of heavy metals; in region III the minimumis 20 pounds. Most heavy metals are toxic substances.

In November 1977, EPA's National Enforcement Investiga-tions Center (NEIC) reported on a pilot study whichevaluated methods for classifying NPDES permitteec. Inits report, NEIC stated that:

"NPSES permits are now classified as "major"or "minor" based on various sets of arbitraryand/or subjective criteria that have been changedfrequently in the past. Substantial differencesexist between States and between EPA Regions as towhat is considered to be a "major" industry. Asthe number of major permits in a state or Regionis used as one of the criteria for distributingresources (positions and funds) for several pro-grams, a uniform method of classifying permitsis needed to assist in providing a resource dis-tribution consistent with national and regionalpriorities."

NEIC recommended further development of a classificationmethod.

Unknown effects of minor permnittee pollution

EPA has not determined the effect of minor permittees'discharges on its attempt to clean up the Nation's water-ways. A previous EPA attempt to compare the dischargesof minor facilities to major facilities had iconclusiveresults.

EPA's comparison considered six effluent parameters:(1) biological oxygen demand, (2) iron, (3) total suspendedsolids, (4) oil and grease, (5) chromium, and (6) phenols.Both chromium and phenols are classified as toxic sub-stances. EPA's analysis showed that major dischargerscontributed the bulk of the biological oxygen demand,but cly slightly more total suspended solids than

9

minor dischargers. No clear difference between majorand minor contributions could be determined for thefour remaining parameters.

EPA should determine the cumulative effect of minorpermittees' discharges on its water clean-up efforts.Without this knowledge, EPA's de-emphasis of complianceactivities relating to the substantially high numberof minor permittees could result in significant waterpollution.

Sampling inspection coveragecould be improved

Periodic sampling inspections r . needed to verifypermittees' reports of compliance. -hout these inspec-tions a permittee could conceivably report itself incompliance wher in reality it is not. For example,recently false discharge monitoring reports were submittedfor a major industrial facility for more than 2 years,In this particular case, the falsification concealedsignificant discharges of a toxic substance intore :reational waters.

To insure accurate permittee discharge reporting, EPAconducts sampling inspections. Ttese inspections are animportant monitoring tool but their effectiveness isdiminished because of inadequate sampling inspectioncoverage, lack of followup inspections, and long andexpensive sampling procedures.

Not all major industrial permittees are sampledannually. For example, during a 15-month period endingDecember 31, 1977, EPA region II conducted samplinginspections of approximately 20 percent of its EPA managedmajor dischargers. EPA regional officials said thatbecause the emphasis is on monitoring major dischargers,minor industrial permittees are usually not sampled.

A study conducted by NEIC showed that the self-monitoring practices of the majority of NPDES sources aresignificantly deficient. In a January 1978 report NEICstated that 99 percent of 106 sources that were evaluatedhad at least one major self-monitoring deficiency. NEICdefined a major deficiency as one which could result inquestionable or unreliable discharge monitoring reportresults. Based on its study, NEIC reported that:

10

"Most of the sources had major defi-ciencies in one of more of the general areasof flow mornitoring sampling techniques andanalytical techniques. Agency use of thesedata for tracking permit compliance variesfrom questionable to unreliable."

In addition to not conducting sampling inspectionsannually, we found that EPA has no policy for requiringfollowup sampling inspections. If noncompliance isdisclosed during a sampling inspection, EPA does notrequire additional sampling to determine if the non-compliance has been corrected. For example, three EPAsampling inspections disclosed significant violations oftoxic substances limitations; however, no followup samplinginspections were conducted for more than 1 year. In onecase, the daily discharge of phenols, a toxic substance,exceeded the permit limitation by 600 pounds.

EPA headquarters officials agreed that followup inspec-tions are a desirable and useful monitoriring tool. Theysaid tnat such inspections are not made because of a lack ofresources and because of other priorities.

Sampling duration

According to EPA regional officials, staffing limita-tions prevent annual sampling inspections of majorindustrial permittees. Sampling inspections requiresignificant staff resources, but EPA could augment itsinspection resources and increase its sampling coverageby reducing the duration of its sampling inspections.

For enforcement purposes, EPA procedures require hat a24-hour inspection should be conducted it the discharger'spermit requires a 24-hour self-monitoring sampling inspec-tion. EPA region II officials stated that they usuallyconduct 24-hour sampling inspections. In region IV,however, EPA conducts two 24-hour inspections. RegionIV sampling inspection officials believe the second24-hour inspection is needed because of possible errorsmade in the first inspection. However, other region IVcompliance and enforcement officials believe that one24-hour inspection should suffice.

Although EPA region II conducts one 24-hour inspection,the director of the region's sampling inspection programbelieves inspections of less than 24-hours could be used.The director believes 8-hour inspections could increaseregion II's sampling inspection coverage by 50 percent.

11

Other individuals are in favor of inspections of lessthan 24 hours. Currently, the Interstate SanitationCommission of New York, New Jersey, and Connecticut uses6-hour inspections for NPDES monitoring purposes. Inaddition, New Jersey State environmental officials believethat less than 24-hour sampling inspections should be usedbecause of the cost. PA region II officials estimate thateach sampling inspecticn costs aprroximately $2,300.

EPA headquarters water enforcement officials do notagree, however, that compliance sampling inspections of lessthan 24-hour duration would result in resource savings.They advised us that although they do not have data on therelative cost of 8-hour versus 24-hour sampling inspections,they believe there would be little or no savings because

-- analytical laboratory support for a sample is thesame regardless of whether an 8-hour or 24-hoursample is taken;

-- samples are conducted using automatic equipmentwhich does not normally require additional inspectorattention;

-- other segments of a compliance inspection, includingchecks of self-monitoring records, laboratory pro-cedures, operation and maintenance procedures, andcompliance schedule requirements, are conductedwhile the sample is being taken; and

-- an 8-hour sample takes a total of 11 hours toobtain (2 extra hours to set up the samplingequipment and 1 hour to remove it) and thereforepersonnel overtime compensation may be required.

They also stated that preliminary data available indicatesthat only 16 percent of the laboi cost of a 24-hour samplinginspection is directly associatec with collecting the sample.

Headquarters enforcement officials also stated that useof a less than 24-hour compliance inspection sample couldraise a question of enforceability. They noted that NPDESpermit limitations are written in terms of daily maximum andmonthly average discharges. In their opinion, violation ofa daily maximum limitation may not be legally documented byless than a 24-hour sample unless the shorter sample isclearly demonstrated as being representative of the dailydischarge. EPP officials further stated that the uniformityand consistency of the discharge must also be considered.

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We agree that less than 24-hour samples may poseenforceability questions, but we believe they could be usedfor compliance monitoring urposes. If they indicatesignificant noncompliance, a 24-hour followup sample couldthen be used to strengthen EPA's enforcement case.

With respect to potential resource savings from theuse of less than 24-hour smples, we believe there is a needto resolve the disagreement between headquarters officialsand EPA regional, State, and interstate officials. Litt!?hard informiation exists on the benefits of less than 24-hoursamples, although personal opinions abound. EPA currentlyhas an ongoing study of compliance sampling inspection whichmay be a useful vehicle for resolving the disagreement.

Adjudicatory hearings are lengthy

After a permit is initially issued, the permittee mayrequest an adjudicatory hearing if he objects to any of thepermit conditions. If the request is approved, thepermittee does not have to comply with the contestedconditions until the hearing is completed.

The hearings are very lengthy. For example, in regionIV as of December 1977, hearings fo, 7 of the 22 majorpermittees had been in process more than 2 years; 4 of themhas been pending for 3 or more years.

Pollution resulting trom contested permit conditionscould be substantial, particularly if caused by toxicsubstances. For example, toxic permit conditions werecontested for the duration of the hearings for six of thenine region II permittees. In one instance the limitsfor arsenic, cadmium, chromium, copper, cyanide, lead, andmercury were contested for more than 10 months; in anotherinstance the limits for two toxics--nickel and lead--were delayed for more than 3 years.

EPA regional officials agreed that hearings haveadversely affected the monitoring program. Accordingto these officials, delays in resolving hearings may causesignificant problems in the future. These officials believethat when permits are revised to reflect best availabletechnology requirements there may be a substantial increasein the number of hearings. One EPA region IV enforcementofficial believes the number of hearings will increasetenfold.

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Adjudicatory hearings are also a drain on EPA staffresources. EPA region II officials said that for 8 monthssix EPA attorneys spent 50 to 100 percent of their time ontwo hearings.

EPA headquarters officials stated that EPA plans torevise the hearing process. They had not yet evaluated,however, the effect such a revision would have onhearings, time frames, and staff resources.

CONCLUSIONS

Frequent and widespread industrial permit noncompliance,including significant toxic permit violations, in some cases,underlines the need for improved EPA compliance monitoring.

EPA de-emphasizes monitoring of minor industrialpermittees. However, the cumulative pollution of thesepermittees is unknown. In addition, lack of detailed EPAcriteria on what constitutes a minor permittee has resultedin inconsistent regional definitions and, therefore,different compliance monitoring emphases.

The effectiveness of EPA's sampling program foridentifying permit violators is reduced by EPA's inabilityto inspect major industrial permittees annually and toconduct followup inspections when significant noncomplianceis noted. The use of less than 24-hour sampling inspectionsmay be a means of increasing sampling coverage.

Lengthy adjudicatory hearings also have an impact onEPA's compliance activities. Pollution resulting fromcontested permit conditions could be substantial partic-ularly if caused by toxic substances. In addition,adjudicatory hearings can be a drain on resources.

RECOMMENDATIONS TO THEADMINISTRATOR, EPA

We recommend the Administrator develop a more compre-hensive monitoring program to insure greater compliancewith the objective of the Clean Water Act, as amended,by

-- Cieatly defining what constitutes a major indus-trial discharger.

-- Increasing EPA's efforts to determine the cumulativepollution attributed to minor industrial dischargers

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and ascertain the effect such minor industrialdischargers have on EPA's attempt to clean upthe Nation's waterways.

-- Increasing the coverage provided by samplinginspections to test and verify permittees reportsof compliance.

-- Requiring followup sampling inspections whensignificant noncompliance is detected.

---Providing priorities and guidance for identifyingand resolving adjudicatory hearings for thosepermittees whose discharges are causing thegreatest adverse environmental effects.

AGENCY COMMENTS

EPA generally agreed with our report recommendations.EPA officiails pointed out that a new method for classifyingmajor and minor permittees should appear in draft regula-tions in December 1978. EPA also indicated that althoughdesirable, increased sampling inspection coverage wouldbe difficult to realize because of staffing limitations.

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CHAPTER 3

MORE EFFECTIVE ENFORCEMENT ACTION NEEDED

AGAINST VIOLATORS OF PERMIT CONDITIONS

Compliance with permit requirements is the ultimategoal of NPDES. When a permit condition is violated, timelyand strong enforcement action is necessary to promote futurecompliance.

In most cases EPA's enforcement responses are neithertimely nor strong. Except for referring violators to theJustice Department and/or barring them from receivingFederal contracts, grants, or loans, EPA cannot penalize theviolator economically. Justice Department referrals, how-ever, are time-ccnsuming, complex, and expensive, and theresults are unpredictable. Since 1975, EPA has been able tobar violators from Federal contracts, ut this is not donevery often.

LACK OF STRONG ENFORCEMENT ACTION

EPA can take various enforcement actions when a pr-mittee permittee fails to comply with permit conditions.These actions include administrative remedies such aswarning letters, telephone calls, administrative orders, andnotices of violations. Other potential and more stringentactions EPA can take include referring violators to theDepartment of Justice and barring them from Federal con-tracts. The range of available enforcement actions arediscussed below.

EPA Enforcement Responses

Telephone call or Used generally in minor cases ofwarning letter failure to submi* reports or other

required documents. Usuallyincludes a demand to submit thedocuments within a specified timeframe and threatens further actionin the form of at least an Adminis-trative Order.

Enforcement letter May be used against any violation.Cites nature of violation and anyprevious attempt3 to gain

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compliance. Letter demands fullexplanation of violation and canrequire compliance within aspecified time frame.

Administrative Order May be used against any violation.Cites nature of violation anddemands compliance within 30 daysor for certain violations, withina reasonable period of time.

Administrative Order May be used against any violation.to Show Cause Rather than demanding compliance

within a specified time frame,requires violator to appear beforeEPA at a specified time and placeto show cause why penalties shouldnot be imposed or legal actioninstituted.

Notice of Violation Used when EPA discovers violationsof a State-managed permit.Notifies the State agency and thedischarger of violation andrequires the State agency to takeaction within a specified timeframe.

Referral to the May be ued against more seriousDepartment of violations. Requests the Depart-Justice ment of Justice to institute civil

or criminal actions againstviolator.

Federal Contractor Can be used concurrently withListing Program referral to the Department of

Justice. Prohibits polluterfrom entering into any non-exempt Federal contracts, grants,or loans.

EPA prepared a guide establishing enforcement responsesappropriate for NPDES permit violations. Although EPAemphasizes that the guide should not be rigidly applied, itanticipates that in most cases responses to violations willbe within the framework of responses outlined in the guide.The type of response suggested varies depending on the typeof noncompliance. For example, the guide suggestsusing administrative orders or judicial action in caseswhere a permit violation results in environmental damage.

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More timely use of administrativeorders is needed

Administrative orders demand that violators comply withpermit conditions. They can also be used to order violatorsto report to EPA why their cases should not be referred tothe Department of Justice. In fiscal year 1977, EPA issued436 administrative orders to major nonmunicipal dischargers.EPA officials said that an administrative order is usuallyEPA's first formal enforcement response although lessstringent enforcement action, such as telephone calls, mayhave been nade prior to the order's issuance.

To determine the effectiveness of administrativeorders, we reviewed 10 orders issued by region II and10 orders issued by region IV. In most of these cases,the orders resulted in permittee compliance, but theeffectiveness of the orders was reduced because anaverage of more than 400 days elapsed from the time theviolation occurred to the time the order was issued.

Of these 20 orders, 7 required less than 250 days and13 required more than 250 days. More than half of these20 cases had continuous violations before the administrativeorders were issued. One permittee consistently violatedfinal permit limits for two toxic substances during a 30-month period. In this case, EPA did not issue an administra-tive order until more than 3 years after the violation. Inanother case, a permittee violated cyanide limits for morethan 18 months before EPA issued an administrative order.

Time delays in issuing administrative orders inhibitthe effectiveness of EPA's administrative enforcementprogram. Administrative orders must be issued fasterto curtail prolonged permit violations.

Time-consuming referral process

EPA may request the Department of Justice to initiatecriminal or civil action against a violator. This action iscalled referral. Although referral is a powerful tool, itdoes have major shortcomings. Referral is time-consuming,and complex, and its results can be unpredictable.According to EPA regional officials, referrals areusually a last resort.

Infrequent referrals

U.S. attorneys are the Attorney General's chief lawenforcement representatives. The four assistant U.S.attorneys we contacted told us that EPA is not referring

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enough cases. During fiscal year 1977, 94 majornonmunicipal permittees were referred to the JusticeDepartment. EPA region IV officials said more casesshould be referred but that staff limitations precludereferring all cases.

A former EPA region II lawyer said that the smallnumber of referrals i due to the difficulty and timeinvolved in (1) referring a case to the Department ofJustice and (2) obtaining a decision in the Federal courts.He also said that as a result, EPA tries to settle caseswithout referring them to the Department of Justice. TheNational Commission on Water Quality stated that EPA'sdependence on outside counsel has probably resulted infewer cases being referred and in greater emphasis ondeveloping an administrative record.

Because referral to Justice is usually not the firstenforcement action taken, a lot of time may elapse betweenthe initial violation and the referral action. Our reviewof all 8 region II referrals and 10 of the 18 region IVreferrals during fiscal year 1977 showed an average of about500 days between the initial violation and the referralaction.

Once a case is referred, its progress toward final reso-lution remains slow. At the time of our review, 13 of theabove 18 cases had been resolved. The average time betweenthe date of referral and the court judgment for these 13cases exceeded 190 days.

EPA reliance on outside counselcould be a problem

The Justice Department represents EPA in civil matters.Officials of both agencies agreed that this representationrequires a close and cooperative relationship. They believethat to achieve this objective, the respective attorneys'roles must be clarified. A June 1977 memorandum of under-standing between EPA and the Justice Department providesthis clarification.

Our discussions with four assistant U.S. attornev3 andEPA enforcement officials revealed that actual or perceivedproblems of cooperation continue to exist. For example, allfour attorneys believe the quality of EPA referral productscould be improved. One U.S. attorney believes EPA refersinsignificant violations.

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EPA enforcement officials said that cooperation withU.S. attorneys ranged from excellent to poor. In oneenforcement case involving an EPA-managed permittee, EPAregional officials were concerned that a potential referralwould be significantly delayed because of a poor workingrelationship with the U.S. attorney. The violation wasnot referred to Justice; instead, the State environmentalagency planned to take administrative enforcement action.

The Department of Justice is aware of the need forimproved day-to-day working relationships with the Federalagencies it represents in court. On March 14, 1978, theAttorney General said that the Department has tried todevelop a new sensitivity for treating client agencies thatis similar t the way private lawyers treat clients. Healso said thaet to help nurture their sensitivity theDepartment is instituting a new system for evaluating theperformance of its lawyers. This system will includeobtaining comments on attorney performance from the clientagencies. We were unable to assess this system's effecton EPA and Justice working relationships at the time of ourreview.

Infrequent use of the FederalCortractor Listing Program

The Federal Contractor Listing Program prohibits awardof Federal contracts, grants, or loans to noncomplyingindustrial f :ilities. Although the program can beeffective, EPA uses it infrequently. The prohibitionapplies to any contract, grant, or loan ver $100,000 andto any contract under $100,000 in cases where the violationresults in a Federal criminal conviction.

Facilities can be listed when EPA's Office of FederalActivities (OFA) determines that they have continuing orrecurring violations of water standards. EPA may considerlisting facilities because of State and local criminalconviction, civil adjudications, and administrative findingsof noncompliance. However, in State-managed programs theGovernor must request EPA to list the facility.

The listing program, however, has been used infre-quently since its inception in July 1975. As of April 15,1978, EPA regional offices had submitted to OFA the namesof 12 facilities that were not complying with water qualityrequirements. No State has requested the program's use.By comparison, during fiscal years 1976 and 1977, EPA issued669 administrative orders and made 139 referrals to U.S.attorneys.

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Of these 12 facilities, 4 were listed, 1 was held inabeyance because of 3ood progress made toward settlement ofthe case, 4 were not listed because the dischargers agreedto take corrective action, and 3 were rejected by OFA. Ofthe three that were rejected, one involved a minordischarger, one was based on a criminal charge which hadbeen dismissed, and the other was rejected after thedischarger's court trial began.

In a Janua,;y 19, 1977, memorandum to regionaladministrators, the Administrator, EPA, stated, "I amsufficiently impressed with the potential of the FederalContractor Listing Program in our enforcement efforts thatI am instituting a policy of a presumption of listing inall serious cases of noncompliance." As examples of theprogram's potential effectiveness, the Administrator citedthe agreement by two noncomplying dischargers to build ajoint wastewater treatment system after they had beenlisted and the agreement by two other facilities to complyafter the regional office had inquired into the status oftheir Federal contracts and/or Federal grant funds.

Regarding "presumption of listing," the Administratorfurther stated that:

"I want to make clear that there will be apresumption of listing for all serious cases ofnoncompliance which include cc.cinuing orrecurring violations of effluent limitations, orcompliance schedules by a major industrialdischarger or a Class A source. In thesesituations, either a recommendation of listingshall be made to OFA or the Region shall providereasons why the recommendations was not initiated."

EPA's Agency Operating Guidance for fiscal year 1978further emphasized the need for using the listing programmore frequently. The guidance stated, in part, that:

"Efficient execution of the program responsibilitiesrequire that the Regional Enforcement Divisionsrecommend to OFA candidates for listing so that alisting proceeding can take place. Regionaloperating priorities are:

1. Each Regional Office should as soon as possiblerefer to OFA for listing its "top 10" polluters.

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2. Make greater use of the listing program as analternative or supplement to filing courtactions".

TI. !gional offices, however, have not used thelisting program more frequently. Responding to a May 24,1977, OFA request for a report on implementing theAdministrator's "presumption of listing" policy, only 6 ofthe 10 EPA offices submitted the requeFted reports; noneof them submitted recommendations for listing facilities.

Listing program exemptionsshould be reduced

Although listed as a violating facility, a dischargeris eligible to participate in many Federal programs becauseEPA's regulations exempt contracts, loans, and grants notexceeding $100,000, unless there has been a Federal criminalconviction. EPA's fiscal year 1978 operating guidanceprovides for OFA to seek a lower contract exemption amountin order to increase the impact of listing.

An OFA official told us that OFA hoped amended regula-tions in the future would reduce the exemption from $100,000to $10,000, which is the ceiling for small purchases. Hesaid OFA believes that many dischargers are not affected bythe listing because they have Federal contracts ranging from$10,000 to $100,000.

To determine the potential impact of lowering thecontract exemptions from $100,000 to $1C,000, we studiedthe monetary ranges of Federal contracts. This informationis not available on a Government-wide basis; however, anofficial of the Federal Supply Service in the GeneralServices Administration provided data showing that 79percent of the Federal Supply Service contracts for fiscalyear 1977 exceeded $10,000 but did not exceed $100,000,as shown below.

Monetary Number of Percentrange contracts of total

Over $100,000 3,297 21$10,000 to $100,000 12,431 79

Total 15,728 100

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Theie figures clearly demonstrate that lowering the exemp-tion amount will substan ially increase the listingprogram's imvpct, at least with regard to Federal SupplyService contracts.

ADMINISTRATIVELY ASSESSED FINES COULDPROVIDE MORE EFFECTIVE ENFORCEMENT ACTION

EPA's present enforcement mechanisms are time-consumingand costly. EPA needs a more effective, more timely, andless costly mechanism to insure that dischargers complywith NPDES permit requirements. The authority to adminis-tratively assess fines against industrial permit violatorswould provide such a mechanism.

Present mechanisms aretime-consuming and costly

If EPA determines that a pe-mittee should be filed forviolating permit conditions, it must refer the case and itsrecommended penalty amount to the Justice Department andsubsequently to the cognizant Fderal court. An EPAofficial said every penalty case must undergo this lengthyprocess.

Administratively assessed penalties could eliminatetime-consuming litigation for both the permittee and theU.S. attorney. In addition, the time and manpower EPAneeds to prepare the referrals could be eliminated.Investigative packages--consisting of the complaint, thereport, and exhibits--must be pepared for such cases.This information may be voluminous, but it is requiredfor all referrals.

EPA has requested administrativepenalty authority

In July 1977, EPA requested that the Congress give itthe authority to administratively assess penalties againstpermit violators. EPA proposed that the amount of thepenalty equal the monetary benefits the permittee realizedby not complying with permit conditions. Connecticut usesa similar system.

EPA believes it should be permitted to administrativelyassess a noncompliance penalty because the present method isoften time-consuming. EPA's Administrator said the proposedmethod would have three important effects: it would (1)improve the efficiency of existing enforcement methods, (2)

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promote compliance by rendering investments for installingand operating and maintaining control facilities asfinancially attractive to business managers as noncompliance,and (3) end the unfair competitive advantage noncomplyingindustrial sources have over complying sources.

The Clean Water Act of 1977 failed to give EPA theauthority to administratively assess noncompliance feesalthough an earlier Senate-approved version included sucha provision. One Senate manager of the Clean Water Actsaid the authority to assess noncompliance penaltieswas unnecessary at the time for two reasons:

-- Industry's compliance record was relativelygood.

-- EPA's current water enforcement policy is to seekcourt-imposed penalties in amounts commensuratewith the economic benefit of delayed compliance.

However, the Senate manager also said:

"Susequent review of compliance under theClean Water Act, the success of the Agency inimplementing its penalty policy through thecourts, and the time de'ey and resource demandsof seeking judicially iTposed penalties mayindicate that the administrative assessmentmechanism will become necessary in thefuture."

Other EPA and State programsprovide administrative assessmentauthority

Although EPA does not have the authority to penalizewater permit violators, it does have the authority toadministratively assess penalties in other programs. Forexample, under the Spill Prevention Control and Counter-measures programs, EPA can fine noncomplying companiesby using violation notices and subsequent conferences andhearings. In fiscal year 1977, EPA region II collectedpenalties in 44 such cases.

The Clean Air Act of 1977 (Public Law 95-95) givesEPA the authority to assess noncompliance penalties.Under this system EPA's Administrato- can assess and collecta noncompliance penalty against any person violatingcertain provisions of the act.

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Some States, including New York and North Carolina,with EPA-approved permit programs have the authority toadministratively assess fines against industrial waterviolators.

The ability to administratively assess monetarypenalties could add clout to EPA's current enforcementprogram. Relying on the courts to impose penaltiescan be a lengthy and resource-intensive process. Inaddition, EPA's current water enforcement policy forseeking court-imposed penalties in amounts commensuratewith the economic benefit of delayed compliance is notapplicable to the high numbers of effluent permitviolations.

NEED FOR IMPROVED EPA OVERVIEWOF STATE-MANAGED PROGRAMS

States with EPA-approved permit programs arePrimarily responsible for permit compliance and enforce-ment activities. EPA, however, is responsible forassuring that State permit program activities are con-sistent and equitable.

EPA needs to strengthen its overview of State-managed programs. Required State noncompliance reportsdo not provide EPA with the data it needs to assess Stateactivities. In addition, sometimes States are notaggressive in their enforcement actions against permitviolators. Also, EPA is ot -Aggressive in its follow-up responses to lax State enforcement action. As moreStates assume responsibility for the permit enforcementprogram, EPA's overview activities will gain increasedimportance.

State noncompliance reportsare inadequate

The State quarterly noncompliance report (QNCR) isan important tool for EPA monitoring of State enforcementprograms. The QNCR lists all State-managed major permitteesthat do not comply with permit conditions during the quarter.It also describes the nature of the noncompliance as wellas actions the State proposes to take to attain compliancewith permit conditions.

Despite its importance in the EPA over iew function,the QNCR has shortcomings and does not provide EPA withsufficient information to adequately accomplish this

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function. For example, the report contains informationon only major dischargers; therefore, EPA is not informedof the total extent of State enforcement action or activity.

QNCRs often do not contain complete information onmajor permittees. In particular, the reports often do notcontain information on the extent of the violation and onthe type and effectiveness of State enforcement action.For example, a recent State QNCR showed that severalproposed enforcement actions were referred to the Stateregional office for followup action. No further informationwas given as to what action, if any, would be taken by theregional ofice.

In region IV State-prepared QNCRs are often incompletewith respect to the extent of violations. The reportsindicate that discharge violations occurred, but they donot indicate to what extent the violations exceeded permitconditions.

In August 1976, and again in August 1977, the NaturalResources Defense Council, Inc., emphasized the need forimproved QNRs. The Council cited problems in numerous areas,particularly regarding the consistency of reporting require-ments. In the August 1977 letter, the Council pointed outQNCR report deficiencies and, as reflected on the QNCR,lack of action and consistency in enforcement.

State enforcement actions and EPAoverview followup are not aggressive

In some cases, States with EPA-approved permit programsare not taking aggressive enforcement action against permitviolators. EPA needs to (1) strengthen its overview follow-up action by notifying States and industrial violators tocorrect permit noncompliance and (2) insure that permitviolations are enforced uniformly and consistently.

State legal officials and EPA regional enforcementofficials believe that State enforcement actions are notaggressive because of the close relationship between Stateenvironmental enforcement officials and local industrialpermittees.

In an October 1975 report the National Commission onWater Quality stated that pollution control agencies,particularly those at the State level, emphasize informalcooperation in their dealings with dischargers rather thanstrong enforcement action. The Commission also stated that.

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engineers--n t lawyers--usually used this informal approach.

This difference sometimes creates internal conflict overenforcement policy.

Our review of 10 Sate enforcement orders issued to

industrial violators showed that 5 did not result in com-

pliance. The State considered further enforcement action

in only one of these cases. One Statb often modifies orders

to extend compliance deadlines becauss of the permittees'

continued inability to achieve permi'. compliance.

EPA's overview o State-managed programs is intended to

insure that a uniform national compliance and enforcement

policy is implemented. As part of its overview responsi-

bility, EPA can take enforcement action if violations of

State-managed permits are detected and the State has failed

to take action. EPA may issue a notice of violation

which (1) notifies the State and the violator of EPA's

findings and (2) threatens enforcement action if the State

does not commence enforcement action within 30 days.

However, notices of violation have not been used

frequently. n EPA region II and region IV only 14 and 21

notices of violation respectively, were issued in fiscal

year 1977. Region IV officials said they were reluctant

to issue notices of violation because of the politicalnature involved. Of 15 major dischargers in one State in

region IV which did not take action on violations, EPA

failed to issue notices of violation in a t mely manner to

3 of the dischargers. In two of these cases permittees

had been violating discharge limits for about 12 months

before notices of violation were issued.

Other organizations are dissatisfied with EPA's over-

view of State permit prcgrams. For example, during our

review an environmental group filed a suit in Federal

Court requesting that EPA withdraw approval of one State's

permit program. The environmental group alleged that

permit violations in the State were widespread because the

State failed to enforce the program. In a ruling on EPA's

motion to dismiss the complaint, the court ruled that EPA

has a mandatory, not discretionary, duty to take action

when it receives information that a State is not admin-

istering its permit program adequately.

Significant participation in the permit program by

29 States and the Virgin Islands as of March 1, 1978, high-

lights the importance of EPA's overview. This overview

will increase in importance since EPA expects more States

to seek its approval to manage their own permit programs.

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CONCLUSIONS

EPA's enforcement of industrial permits needs strength-ening. Although a strong enforcement program is necessaryto promote compliance, EPA enforcement actions usuallylack clout.

EPA's formal administrative response, the administra-tive order, which cannot be used to fine violators, shouldbe issued in a more timely manner. Use of Federal courts,a powerful enforcement action, is hampered by its lengthyand resource-intensive process. Effectiveness of the con-tractor listing program is reduced because of infrequentuse and limited applicability to contracts, grants, orloans which exceed $100,000, in the absence of a Federalcriminal conviction.

Unlike some State-managed industrial permit programsand other EPA regulatory programs, EPA lacks authority toadministratively assess penalties against permit violators.This authority would allow EPA to avoid lengthy andresource-intensive legal processes.

As more States assume management of the permit program,EPA's efforts to insure uniform enforcement become moreimportant. However, EPA's current overview is restrictedby inadequate State reports and its own reluctanceto officially notify the States of program deficiencies.

RECOMMENDATIONS TO THEADMINISTRATOR, EPA

We recommend the Administrator develop a moreaggressive enforcement program against violators ofindustrial permit conditions by

-- Requiring more timely and effective use ofadministrative orders.

-- Directing EPA regional offices to make greateruse of the listing program by recommending facilities,as warranted, for placement on the list of violatingfacilities.

-- Amending EPA's regulation to lower the amount ofexem.pted contracts, loans, and grants from $100,000to $19,000 to increase the impact of listing.

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-- Encouraging States which have assumed the permitprogram to participate in the listing program;

-- Improving EPA's overview of State-managed permitprograms by (1) improving the quality of Statereports and (2) aggressively foll)wing up on anyinstances in which the State failed to takeappropriate enforcement action.

--Periodically evaluating the adequacy and timelinessof existing enforcement mechanisms and, if necessary,requesting again that the Congress provide EPA withthe authority to administratively assess penaltiesagainst industrial permit violators.

AGENCY COMMENTS

EPA generally concurred with our report recommend-tions. EPA officials stated that they are encouragine heregional offices to expedite the issuance of administrativeorders and to increase the use of referrals to theDepartment of Justice. They pointed out, for example, thatduring the 10-month period ending July 30, 1978, EA hadmade 105 referrals to the Department of Justice comparedto 94 made in the prior fiscal year. They believe thatthe authority to administratively assess penalties couldstrengthen their enforcement activities. They furtherstated that planned changes in the State overview activitiesshould assist in correcting the deficiencies noted in ourreport.

In commenting on this report, the Department of JusticeLand and Natural Resources Division indicated that they werefundamentally in agreement with its contents.

(087201)

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