~,,to s'~'''.r ,) . f t "{, i;; ~ ~ ~ <:! ~ . ,.,. -:-,.4 ( PnO\(. REDACTE D UNI TED STATES ENVIRONMENTA L PRO TECTION AGE NCY ~0: v' ,o REGION..! ATLANTA FEDERAL CEN TER 61 FORSYTH STREET ATLANTA. GEORGIA 3030 3-89 60 .\tlr. Don ald R. van der Vaa rt 1'\f\l 0 9 Sec reta ry Nor th C arol ina Dep artm enl of Env ironmental Quality 2 17 Wes t .Ion es S tree t Ral eigh . Nor th Car olina 27603 2016 Dea r Sec reta ry van der Vaa.1: l am v.Ti ling as a foll ow up to ou r disc ussions last Nov emb er con cern ing the initi al find ings the Env iron men lal Pro tect ion Age ncy Reg ion 4 (EP A) differential ove rsig ht revi ew of the Nor th Car o lina Dep artm ent of Env iron mental Qua lity (NC DEQ ) enfo rcem ent prog ram s. EPA initi ated the revi ew in resp ons e to perf orm anc e tren ds obse rved in NCD EQ' s State Rev iew Fram ewo rk (SR F) met rics dur ing the Ann ua l Dat a Met rics Ana lysi s (AD MA ). The FYI 4 ADM A for North Car o li na reve aled s igni fica nt dow nwa rd tren ds ove r the prio r four years (FY II - FY 14) in seve ral key e nfor cem ent re late d mct rics . incl udin g dro ps in info rma l and form al enfo rcem ent acti ons, pena lties . and sig ni fiea nt no n-co mpl ianc e des igna tion s. The dro p in enfo rcem ent outp uts and outc omes coincide s with seve ral legi slat ive and poli cy c han ges mad e in 20 II whi ch became effe cliv e in fY 12. or EPA noti fied NC DE Q in earl y 20 15 that additional review was need ed to detem1i ne if the Stat e was mee ting its dele gate d resp ons ibilities for com plia nce assunu1cc imp lem enta tion . To ad van ce E PA· s und erst and ing ofN CD EQ 's progn.un s, revi ew team s con sisting of Offi ce Enfo rce me nt Coo rdin atio n (OE C) staf f and repr esen tati ves for the Clea n Air Act (CA A), Clea n Wat er Act (CW A), and Res o urce Con serv atio n and Rec ove ry Act ( RCR I\) conducted a differen tial ove rsig ht revi ew of reco rds or rece nt \'io lar ions and enfo rceme nt acti vitie s. The se revi ews wer e com plet ed in FY 15. and a sum mar y of th e resu lts was shar ed \·Vith you r seni or enfo rcem ent man agers in our ann ual CPA /Sta te com plia nce assu ranc e mee ting on Nov emb er 9, 2015. As prom ised d urin g our mee ting. I have included with thi s letter a more deta iled des crip tio n ami exampl es of the con cern s o ur revie,..vs have identili ed. Add itionally. I hav e a lso arti cula ted pro pos ed step s I beli eve a re nee ded to add ress each issue. I suggest that NCD EQ and EPA sche d ule a mee ting in Ra leig h or At lant a with in the nex t few wee ks to begin outlin ing a plan lor add ress ing the iden tifie d con cern s. \Vh ilc ther e is still muc h wor k to be don e, I am enco urag ed to see rece nt imp rove men ts retl ecte d in the ove rsig iH file revi ews and som e o f the FY 15 AO MA metrics. and I wan ted to ack now ledg e the pro gres s in thes e area s. The se imp rove men ts are a step in the right dire ctio n, and I hop e they can form the f(nm dati on for fun her prog ress. How eve r. con sisle nt with the Age ncy ' s Nat iona l Stra tc!.!v li.)r lmp ro vinu thc rs i!.!ht or S tate Enl orcc men l J>crl o nna ncc. EPA will con tinu e to purs ue app ro pria te esca latio n acti ons to add ress the con cern s we hav e iden ti fi ed ifad equ alc prog ress is nol mad e. The se e ffo rts may Intern et Addr ess (URL1 • http.i /www ep:t.g ov R·_'C',.'It.·ct nct\CI :mtL' . Prmh'< l \'o'11h Vcqct ..lb,\· Qtl Aa~cd lnh·~ 00 Ht·t~)Cit~{' P,tpel lt~llllltlltJ!tl ·m Poo.;I('CHl~lllllt.?t) include additional EPA oversight of inspections and enforcement, independent EPA actions, and reviews of program authorization. My sense from our meeting in November was that NCDEQ enforcement managers agreed with EPA ·s findings and sought specific input on areas of resolution. I look forward to establishing specific steps toward improvement. As always, fee l free to contact me to discuss any ideas or concerns. Sincerely . .J St+ /~ J. Sco11 Gordon Director Office of Enforcement Coordination Enc losure cc: Mr. John Evans, Chief Deputy Secretary Mr. Tom Reeder, Assistant Secretary fo r the Environment Ms. Sheila Holman, Director, Division of Air Quality Mr. Michael Scott, Director, Division of Waste Management Ms. Kim Colson, Director. Division ofWatcr Infrastructure Mr. Jay Zimmerman. Director, Division of Water Resources Mr. Tracy Davis, Director, Division of Energy, Mineral & Land Resources bee: Carol Kemker, Acting Director, Air. Pesticides and Toxics Management Division Beverly Spagg, Chief, Air Enforcement and Taxies Branch James Giattina, Director, Water Protection Division Denisse Diaz, NPDES Permitting and Enforcement Branch Ala11 Fam1er. Director, Resource Conservation and Restoration Division Bill Truman, Acting Chief, Enforcement and Compliance Branch Enclos ur·c EPA "s expecta tions for the performance ofNort h Carolina·s compliance assuran ce program s are laid out in a collecti on of program-specific agreements and national policy docume nts for each program . including. but not limited to the documents indicated below: Overarching: • • Rt..:Yisccl Po lic' hamt..:\Hlr" l'ln StaictEJ>,\ t:nron.: cment Aurecmcnts 0\'l:rsiu ht o!" State anJ Lot:a l Pcnaltv Assessment s: Revi sions to the Policy Framew ork State EP.-\ .- \ urcc:mc nts l(H CAA: • • • • NCDE Q Air Planning Agreement lor the CAl\ Section I 05 grant ~C DEQ CAA Compliance Monito ring Strategy (CMS) Plan C I<: an :\ i r ;\ct Station ;HY Source Com pi iancc 1\·lon itorinu Str~llcu' T imch ami Appropriate l:n lorccmcnt Rt'SIXlilSL' to lli!!h Priorit' Violatio ns (_j u iJam:c on Fcdcr~ll h·-Rcportnhlc Vit) lations l(lr Clcnn .\ ir .'\ct Stnt ionn1T Snun.:cs • CWA: • • • NC DEQ CWA Section I 06 grant work plan NCDE Q NPDES EM S Plan NCDE Q/ Region 4 CW 1\ Memorandum of Agreement C \\.A :\PDES Compliam:c 1\'lonitorin!.! Stratcl.!y C\\.A NPDES Enfo rcemen t :vlanauerncnt s ,·stcm • • RCRA: • • • • • NC DEQ RCRA grant work plan NC DEQ/ Region 4 RCRA Memorandum of Agreement Cnmpl iance ~l u nitoring Strat~ !! ' ror the RCR.'\ Su btitk C Program and A ppendic es R(' R,\ ll azmduu s \\ 'astc 1-:nl\m:c mmt R ~spo n sc l'o lic' RC R..'\ Ch il l'cnalt' PClliC\ EPA evaluat ed the performance of North Caro lina·s major regulatory program s during the Round 3 SRF review, which was completed in September 2013 based on FY20 II activitie s. The following areas were identi tied as the priority issues affecting the State· s pcrfom1ancc: • • • For all three media (CAA, CWA. & RCRA), improvement was needed in the docum entatio n of penalty ca lculations. to include the consideration of economic benefit and the rationa le for any differe nce betwee n the initial and fi nal penalty assessed; Improv ement was needed in the accuracy of data entry in the NPDES Integrated Compliance ln tormation System (ICIS-NPDES): Improvement was needed in the timeliness and appropriateness of CWA enforce ment actions . and these actions needed to promot e a return to compliance. 3 A summary or all of the findings is included in the table below: Review Element Element I - Data Completeness Element 2 - Data Accuracy Element 3 -Timeliness of Data Entry Element 4 - Completion of Commitments Element 5 - Inspection Coverage Element 6- Quality of Inspection Reports Element 7- Identification ofViolations Element 8- Identification ofHPVs Element 9 - Enforcement Promotes Compliance Element I 0 - Timely and Appropriate Action Element I I - Penalty Calculation Method Element 12 - Final Penalty Assessment & Col lection CWA CAA Meets Meets Improvement Attention Meets No Finding Attention Meets Meets I Meets Improvement Meets Attention Meets Meets Meets Improvement Meets Improvement Meets Improvement Improvement Meets Attention RCRA Meets Meets No Finding Mee ts Improveme nt Meets Meets Meets Meets Meets Improvement Meets Despite progress in addressing some of the areas for improvement. EPA observed significant downward trends in NCDEQ's performance metrics during the FYI4 Annual Data Metrics Analysis (ADMA). Between the years ofFYII to FYI4. several key enforcement related metrics showed a significant decline, including drops in informal and formal enforcement actions'. penalties. and signilil:ant noncompliance designations. This drop in North Carolina·s enforcement outputs and outcomes coincides with several legislative and policy changes made in 2011 which became effective in FY I2. First. North Carolina·s Regulatory Reform Act of 20 II (Session Law 20 11-398) required the Secretary to ..develop a uniform policy lor noti ftcation of deficiencies and violations for all regulatory programs within the Department. .. ··2 T he resulting Uni t'twm Violation ~o til ication Pnlic' l(lr the D~IXHtment of Environment and Natural R e~o urce s (often referred to as the ..Tiered Enforcement Policy"') asserts ·'that violations of rules typically lit into three categories - I. Rccordkeeping and paperwork that result in little or no harm to the environment or public health: 2. More serious infractions that could result in harm to the environment or public health ; and 3. Violations that have clearly impacted the environment or public health. The policy will formally recognize the tiered approach. so that a ''Tier 1·· violation will be met with a less severe response than a ''Tier r violation.'"3 The policy a lso establishes th ree form s of notice which generally correlate with these violat ion tiers: Notice of De ficiency (NOD) for Tier I violations: Notice of Violation (NOV) for T ier 2 vio lati ons: and Notice of Recommendation for Enforcement for Tier 3 violations. which is typicall y accompanied by a subsequent civil penalty assessment:' Our data analysis and differential oversight reviews identified several direct consequences of the application ofNCDEQ"s Tiered Enforcement Policy which we believe weaken the State·s compliance assurance programs. Firs t. fewer violations are being reported to EPA (and the public) due to the fact : NCDEQ has asked EPA for clarifica t ion on the definition of formal enforcement. This varies by program, but EPA has prepared the document Informal and Formal Enforcement Action Definitions which may provide some clarity. 2 North Carolina Session Law 2011-398, Section 61. 3 Uniform Violation Notification Policy for the Department of Environment and Natural Resources, p. 2. 'Ibid. 4 that NODs arc not being e ntered into the national data systems. This practict: not only falls short of' EPA · s policy expect ations (e.g. CAA PRY policy). but it signifi cantly reduce s transp arency to both E PA and the public . Next. our rcvicv..• con tinned that numero us source s were cileu l'or violati ons utili z ing the NOD or NOV. somet imes on multip le occasio ns. but without approp riate escala tion to the more severe l'orma l e nforcl! ment respon se. which compr omised a key goal of "credib le nation al deterre nce to nonco m pi iance. '' 5 Eviden ce of' this was that source s were frequen tly cited multip le times lor the same types o f v io la ti ons. r\noth cr signifi cant legisla tive develo pment in 2011 which had direct impact s to NCDE Q 's e n forcem ent progra ms was the passag e ofNorth Carolin a Session Law 201 1-1 45. which amend s Part 1 of Article 7 of Chapt er 143 B of the Gener al Statute s by adding a new section as follows: "§ 1438-2 79.16. Civil penalty assessm ents. (a) The purpos e or this section is to provide to the person receivi ng a notice of violati on of an e n vironm ental statute or an enviro nmenta l rule a greater opport unity to unders tand what cotTcc tive action is nt:cded. recei ve tedmical assistan~:e from the Depart ment of Enviro nment and Natun l l Resou rces. and to take the needed correct ive action. It is also the purpos e of thi s sectio n to provid e to the person receiving the notice of violation a greater opport un ity lor inform ally resolv ing matter s involv ing any su<.:h vio lation. (b) In order to fulfill the purpos e set torth in subsec tion (a) of this section . the Depar tmem of Enviro nme nt and Natura l Resour ces shall. effecti ve .July 1. 201 I, extend the period of time by 10 days bet ween the time the violato r is sent a notice or violatio n of an enviro nmen tal statute or an e n vironm ental rule and the subsequent date the violator is sent an assess ment or the civil penalt y for the violati on. "6 Based o n our differe ntial oversig ht revic\\' findings. NCDE Q 's implem entatio n of this legisla tive action has resu lted in fewer formal penalty actions being issued. Again. this raises concer ns about effective deterr ence and provid ing a "le\·el playin g field" lor source s throug hout the coumr y. Keepin g in mind the Federa l policy frame outline d here. as well as the recent state kgisla tive and policy re\·isio ns discus sed, we have summa rized our program specific findings beJm.v. with reco mme nded next steps for eat:h area of conccm . 5 Revi sed Policy Fram ework for St<'! te/EPA Enfo• cem en t 1\r,rPem rnts, p. 1. North Carolin a SPSS1on Law 2011 14~. p. 164 . 5 Clean Air Act Backgroun d: The FY 14 Clean Air Act ADM/\ revealed significant downward trends over the prior four years in several key metrics, with a precipitous drop occurring between FY 13 and FY 14. As an example, CAA metric for assessed penalties dropped by 93% statewide. from about $235.000 in FY II to just under $17,000 in FY 14. During the same period. the number of facilities with informal and formal enforcement actions also dropped dramatically (52% and 79%, respectively). In addition. facilities with an HPV determination dropped by 64%. Though EPA makes HPV determinations on behalf ofNC. this drop in HPVs results from fewer NOVs being presented to EPA for review . Metric ID l e2 lfl l gl l g2 lhl lh2 8a - Metric Name Number of Facilities with an Informal Enforcement Action (Facility Count) Number of HPVs Identified (Activity Count) Number of Formal Enforcement Actions Issued to Tier I Facilities (Activity Count) Number of Tier I Facilities Subject to a Formal Enforcement Action (f-acility Count) Total /\mount of Assessed Penalties Number of" Formal Enforcement Actio ns with an Assessed Penalty HPV Discovery Rate Per Major f.acilit}' Universe 2011 124 2012 73 2013 61 2014 12 13 8 4 15 14 12 9 14 10 12 .) $235 .1 59 13 $95,356 $97,629 II $16.865 9 3. 1% 2.8% 2.4% 0.9% 59 I .., ~ .) The Division of Air Quality (DAQ) revised their f-acility Guidelines, Penahv Tree. and Open Burning Guidelines on March 19. 2012. to address the requirements of the Tiered Enforcement Policy. EPA applauds NCDEQ"s development of a penalty policy. which is encouraged in EPA ·s g uidance entitled ··oversight of State and Local Penalty Assessments: Revisions to the Policy Framework for StatefEPA Agreements'". which states the foll owing: '"State and local enforcement agencies are strongly encouraged to develop wri tten penalty policies. criteria. or procedures for penalty assessments. EPA w ill then revi~::\v and evaluate. but not formall y approve. these penalty pol icies. ~.:riteria or procedures lor consistency with th~.: general penalty criteria ......7 However. Region 4 was not given an opportunit y to review these revisions. which would have put us on notice about the potential impacts of the Tiered Enforcement Policy. and given us a chance to provide feedback with respect to the policy's compliance with EPA guidance and penalty criteria. 7 Oversight of State and Local Penalty Assessments: Revisions to the Policy Framework for State/EPA Agreement s, p. 2. 6 To furt her eva lua te \\·hethc r the dro p in enforcement was w