It is axiomatic that lawmakers and agencies should establish only those environmental laws and regulations that are enforceable.  The same reasoning applies to enforcement agreements such as consent decrees.  Simply put, if an agency implementing a law or regulation and a regulated entity sign a consent decree indicating that the entity will conduct certain activities to achieve environmental goals (including, but not necessarily limited to, compliance), there should be a means to determine if the actions are being taken and the goals are being achieved.  And that, apparently, is what the EPA has not accomplished to an adequate degree with its National Enforcement Initiative (NEI) for the petroleum refinery industry, also called the National Petroleum Refinery Initiative (NPRI). 

That observation was recently published by EPA’s Office of Inspector General (OIG), which found that the EPA put more effort into negotiating consent decrees under the NPRI than in monitoring their outcome as well as the results of the NPRI in general.  EPA’s Office of Enforcement and Compliance Assurance (OECA) agreed with this assessment and said it would increase its effort to determine if refining companies were meeting the terms of consent decrees.  The OECA has repeatedly explained that one major impediment in closing out agreements in the NPRI and other NEIs was a lack of trained personnel to collect and assess results data. The OECA now says it is beginning to compensate for the lack of staff with innovations such as advanced emissions/pollutant detection technology and e-reporting under the Agency’s Next Generation Compliance program.

70 percent in violation

Petroleum refineries emit multiple air pollutants from a number of sources.  In 1996, the toxics release inventory (TRI) showed refineries released over 66 million pounds of toxic pollutants.  In EPA’s most recent TRI for 2011 (released in January 2013), refineries reported releasing over 56 million pounds of toxic pollutants.  Fugitive air emissions and stack air emissions accounted for approximately 58 percent of these releases. 

Also, between 1994 and 1995, the EPA conducted inspections of 109 refineries around the country.  The sweep found that 70 percent of the facilities had Clean Air Act (CAA) violations, including absence of best available control technologies for fluidized catalytic cracking units, heaters, and boilers as required by New Source Review/Prevention of Significant Deterioration (NSR/PSD) programs; fugitive emissions leaks from valves, pumps, and connectors; uncontrolled and unreported benzene waste; and use of flaring for routine purposes instead emergencies.  These results were viewed as a 1995 baseline that would serve as the yardstick for improvements under the NPRI.

In 1996, the EPA selected the petroleum refinery sector as one of the agency’s first NEIs.  The NEI differs from EPA’s core enforcement program, which covers the CAA, CWA, RCRA, and other environmental statutes and comprises the bulk of the Agency’s enforcement activity.  Because EPA’s enforcement responsibilities cover millions of regulated sites and many statutes, the OECA and the Agency’s regions form NEI teams to focus on the most serious air, water, waste, and chemical hazards associated with specific industry sectors or specific issues such as municipal stormwater runoff. 
               
NPRI goals

Specifically for the NPRI, the EPA established four goals:

• Develop settlements for 80 percent of the domestic refining capacity (13.9 billion barrels per day [bpd] of total 2004 production of 17.4 billion bpd by 142 refineries).
• Achieve 50 percent improvement in compliance over the 1995 baseline. 
• Achieve 20 percent reduction in emissions of SO2 and NOx over the 1995 baseline.
• Agree on 100 percent consent decree deliverables requiring a response and 75 percent responding within 90 days. 

The EPA concluded the NPRI in 2007 when 80 percent of the refining facilities were under a consent decree.  By the end of January 2011, the Agency had consent decrees in place for 28 refining companies (105 refineries) that accounted for 90 percent of the national industrial capacity.

Currently, only 30 operating refineries are not parties to an NPRI consent decree.  By agreeing to install technological controls required by consent decrees, participating companies made ambitious commitments to reduce annual refinery emissions.  For example, the EPA estimated that companies under consent decrees would cumulatively reduce pollution by 93,000 tons of NOx and 256,000 tons of SO2 annually.  If achieved, this would represent a 24 percent reduction in NOx and a 39 percent reduction in SO2 emissions annually from 1995 levels. The estimated annual reduction in NOx is equivalent to the emissions of approximately 89 million cars driving an average of 13,500 miles per year.

Useful data absent

The OIG notes that EPA’s NPRI has resulted in improvements to existing control technologies and development of new technologies in the petroleum refineries sector.  For example:

• Consent decrees require companies to install continuous emissions monitoring systems (CEMS) on major emissions sources.  Once facilities install CEMS, they can monitor data internally and report the data to the EPA.  The EPA can then use the CEMS data to establish equipment-specific and facility-specific emissions limits.
• The more-recent consent decrees require fence-line monitoring.  These monitors provide near real-time reports of emissions data on public websites, enhancing transparency.
• Since 2010, consent decrees have required companies to install low-leak valves when replacing existing valves.  These valves virtually eliminate pollutant leaks and reduce the need for the EPA to reinspect the facility for compliance with leak-detection protocols.

In a 2004 report, the OIG said that OECA’s performance measurement and reporting approach for the NPRI did not provide useful and reliable information.  The report included 17 recommendations for improvement.  Among them, the OIG recommended that the OECA improve refinery consent decree implementation and tracking and ensure better measurement and reporting of refinery program outcomes.  In March 2009, the OECA certified that it had completed all corrective actions for the report.

But in its current report, the OIG states that the OECA has not demonstrated whether the NPRI resulted in sustained compliance or continued emissions reductions in the refinery sector.  The inability to determine the results of the consent decrees can be attributed to the number of follow-up inspections conducted.  The OIG said that to determine the results of the NPRI, the EPA needed to conduct inspections to the same degree it did in 1994 and 1995 when the Agency developed the 1995 baseline.  But the EPA fell far short of what was needed.  The OIG states:

“Due to differences in the number of refineries in each region and in resource availability to conduct inspections, the EPA did not conduct follow-up inspections at facilities consistently.  Because the EPA regions prioritized other activities over NPRI monitoring and evaluation, more than half the facilities under consent decree had not received follow-up inspections.  In fact, between 2003 and 2012, Region 6 and the OECA conducted consent decree follow-up inspections at only 19 of the 35 consent decree facilities in Region 6.  This is notable because Region 6 contains more refineries—and more refineries under consent decree—than any other region.”

Moreover, adds the OIG, some of the nation’s largest refineries went without any consent decree follow-up inspections by the EPA.

The resource shortage

Because of the lack of NPRI inspections, there is currently no verification of whether the cumulative goal of reducing NOx and SO2 pollution by 205,759 tons per year has been achieved, is nearing achievement, or is far short of achievement.  A 2006 analysis showed that overall, emissions from NPRI companies declined by almost 50 percent.  However, facility-specific analysis showed mixed results.  Data demonstrated that some facilities would likely meet or exceed anticipated emissions-reduction goals, but emissions reported by other facilities increased since signing the consent decrees.

The 2006 analysis was also limited because it did not show the progress of all facilities under consent decrees at the time.  Also, some results could not be reported because companies had consent decrees that allowed them to install complex equipment (e.g., to reduce flaring) over a 10-year period.  This applied to one ConocoPhillips refinery, which said it would not meet its emissions reduction goals until 2015. 

EPA enforcement officials identified resource shortages as a reason for not monitoring emissions and compliance goals for the NPRI. The Agency reduced resources devoted to the NPRI even though the work required to ensure the initiative resulted in the intended outcomes continued and expanded.  When the EPA concluded the NPRI in 2007, no consent decrees had been terminated.  In 2007, EPA’s 20 companywide consent decrees covered 92 refineries.  Moreover, after the NPRI ended, the EPA continued to negotiate and sign consent decrees with additional refineries, eventually reaching 32 decrees covering 116 facilities by the end of 2012.  Each of the 32 consent decrees included hundreds of activities, reports, and results to monitor and evaluate; most decrees were designed to last for 10 or more years.

Despite the need for continued and increasing oversight, the OECA concluded the NPRI in 2007 and shifted resources to other priorities.  Regional personnel told the OIG that adequately monitoring implementation required a resource commitment at least as large as the resources used to negotiate the consent decrees.  But in 2012, the OECA had one inspector responsible for ensuring the refineries comply with the NSR/PSD consent decree components.

In addition, only a few engineers are qualified to conduct leak detection and repair and benzene inspections.  EPA regions also had very limited resources.  For example, Region 9 had one staff person responsible for overseeing consent decree compliance for 15 refineries and negotiating with companies not yet under a consent decree.

“By not taking action to assess the outcomes of the NPRI, the EPA misses opportunities to design improved strategies that can be applied in other contexts,” says the OIG, “and the Agency risks falling short in being able to demonstrate that the NPRI achieved its intended goals.”

Corrections planned

As noted, the EPA has not contested the findings of the OIG report.  Accordingly the Agency said it would undertake the following corrective actions:

• The OECA will issue a memorandum to the regions reminding them of the requirements for termination and to work with the Office of Civil Enforcement for confirmation that all termination requirements have been met.  The OECA said it is working with refiners seeking termination to develop graphs of actual annual emissions reductions achieved under the consent decree at the time of termination.
• An OECA workgroup explored ways to use advanced monitoring, e-reporting, public transparency, third-party verification, and other tools from the Next Generation compliance program in enforcement settlements.
• The OECA will produce guidance that requires the strategies for future NEIs to include an evaluation component for determining, where feasible, the extent to which initiatives achieve goals established in strategies.

The OIG stated that the Agency’s proposed corrective actions are “responsive” to concerns raised in the report. 

OIG’s report  

William C. Schillaci
BSchillaci@blr.com